Where only land is transferred, the acquisition value of the building shall not be included in necessary expenses.

Where only the land is transferred in the state of a site after acquiring the land and the building on the ground, and only the land is demolished to be used, the acquisition value of the building shall not be included in the necessary expenses.

2014Gudan100520 Revocation of Disposition of Imposing capital gains tax

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00. Head of tax office

February 6, 2015

March 6, 2015

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s imposition of capital gains tax (including additional tax) for the year 2012 against the Plaintiff on July 2, 2013 is revoked.

1. Details of the disposition;

A. On February 26, 1993, the Plaintiff acquired a successful bid for KRW 488,430,90 on 00,000, 120-2, 120-2, 789 square meters (hereinafter “instant land”) and its ground buildings (hereinafter “instant building”) and removed the instant building on August 5, 2005.

B. On April 25, 2012, the Plaintiff transferred the instant land to KRW 600 million.

C. Around June 2012, the Plaintiff: (a) deducted the acquisition value of the instant building from KRW 193,902,647; and (b) KRW 11,00,000 from the removal cost to the Defendant as necessary expenses; and (c) subsequently scheduled KRW 6,316,338 of the transfer income tax for the year 2012.

D. On July 2, 2013, the Defendant corrected the Plaintiff’s transfer income tax (including additional tax; hereinafter the same shall apply) for the year 2012 to KRW 89,893,570 for the Plaintiff. On May 12, 2014, the Tax Tribunal rendered a decision to re-examine the cost of demolition of the instant building and to correct the tax base and the amount of tax. As such, the amount of KRW 42,00,000 for the removal cost of the instant building was additionally recognized, and the Defendant corrected the amount of KRW 17,710,164 for the adjusted amount of KRW 72,183,40 for the adjusted amount (one won unit forest) (hereinafter referred to as “instant disposition”). As a result, the Defendant’s adjusted the amount of increase to KRW 72,183,400 for the Plaintiff on July 2, 2013.

[Ground of recognition] Facts without dispute, Gap 4 through 7 evidence, Eul 1 through 3 evidence (including each number for evidence Nos. 4, 5, 1 and 2) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Considering the fact that the Plaintiff entered into a contract to purchase the instant land and buildings solely with the value of the instant land, the location and construction of the instant building had no value, the rent revenue of the instant building is considerably low compared to the successful bid price, and the removal of the instant building was delayed due to the Plaintiff’s failure to prepare the removal cost, etc., the Plaintiff was awarded a successful bid for the purpose of using only the instant land. Accordingly, the acquisition price of the instant building should be recognized as necessary expenses for the instant land, and the prior disposition on a different premise is unlawful.

B. Determination

In a case where land and a building on the ground were acquired along with the land and a building on the ground, and only the land is transferred in the state of a site, such as the commencement of the removal of the building within a short time after the acquisition, if it is deemed evident that the acquisition of the land and a building was to be aimed at utilizing only the land by removing the building from the beginning to the beginning, the acquisition value and the cost of removal of the removed building may be included in the necessary expenses of the transferred asset included in the acquisition value of the land (see, e.g., Supreme Court Decisions 92Nu7399, Sept. 8, 199; 92Nu8781, Oct. 27, 1992)

In light of the fact that the Plaintiff removed the instant building more than 12 years after the Plaintiff acquired it, and that the Plaintiff was a person who had leased income until the Plaintiff acquired it and demolished the instant building, it cannot be deemed that the Plaintiff was an obvious purpose to solely use the instant building by removing it from the beginning.

Therefore, the instant disposition that did not recognize the acquisition value of the instant building as necessary expenses for the instant land is lawful, and the Plaintiff’s assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.