[1] Whether the provision on the constructive gift under the former Inheritance Tax and Gift Tax Act applies to a case where an owner who acquired shares has transferred shares under the name of another person with the consent of the other person (affirmative)

[2] The elements for calculating the value of donated property pursuant to the supplementary evaluation method under Article 63 (1) 1 (c) of the former Inheritance Tax and Gift Tax Act

[1] Article 41-2 (1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) provides that in case where the actual owner and the nominal owner are different from each other, the value of the relevant property shall be deemed to have been donated to the actual owner on the date when the registration is made in the name of the nominal owner, notwithstanding Article 14 of the Framework Act on National Taxes, if the actual owner and the nominal owner are to transfer the right or exercise the right, and in case where six months have passed after the date of incorporation or the due date of new shares, the transfer of the shares made before the issuance of the share certificates shall be deemed to have been effective against the company. In this case, the transferee of the shares may file a claim for the change of ownership with the company by proving that he/she acquired the shares, so even if the actual owner who acquired the shares did not have the share certificates, the

[2] In full view of the provisions of Article 60 of the Inheritance Tax and Gift Tax Act and Article 49 of the former Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 1660 of Dec. 31, 199), since the market price stipulated in the above provisions refers to an objective exchange price formed through a general and normal transaction, even if there is a transaction practice, it cannot be deemed as a price formed by a normal transaction that properly reflects the objective exchange value of the donated property, and if the subject of the gift is unlisted stocks, it shall be deemed difficult to calculate the market price and can be calculated according to the supplementary assessment method stipulated in Article 63 (1) 1 (c) of the Inheritance Tax and Gift Tax Act.

[1] Article 41-2 (1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) / [2] Article 60 of the Inheritance Tax and Gift Tax Act, Article 63 (1) 1 (c) of the Inheritance Tax and Gift Tax Act, Article 49 of the former Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 16660 of Dec. 31, 199)

[2] Supreme Court Decision 92Nu1229 delivered on July 10, 1990 (Gong1990, 1731), Supreme Court Decision 92Nu251 delivered on February 12, 1993 (Gong1993Sang, 1015), Supreme Court Decision 92Nu787 delivered on February 26, 1993 (Gong1993Sang, 1108), Supreme Court Decision 92Nu16218 delivered on June 11, 1993 (Gong193Ha, 205Ha, 2423), Supreme Court Decision 95Nu23 delivered on June 13, 1995 (Gong195Ha, 2423), Supreme Court Decision 96Nu29304 delivered on October 29, 196 (Gong1993Ha, 204).

Plaintiff (Attorney Lee Jae-chul, Counsel for plaintiff-appellant)

The director of the tax office.

Seoul High Court Decision 2001Nu14800 delivered on April 30, 2003

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

1. Judgment on the second ground for appeal

Based on its employment evidence, the court below acknowledged that the non-party 1 purchased 123,423 shares of the non-party company, non-indicted 2, etc., non-indicted 1, on or around December 18, 199, 5 billion won (40,511 won per share) of 123,423 shares of the non-party company, non-indicted 2, etc., and decided to title trust 13,423 shares of this case in the name of the plaintiff, and transferred transfer to the purchaser on the register of shareholders with the consent of the plaintiff. The non-party 1 prepared as of December 31, 199 as of December 31, 199 and submitted by the tax office or a copy of the transfer statement delivered by the non-party 1 to the non-party 2, who is the transferor of the shares of this case, as the transferee of the shares of this case, all of the plaintiff 13,423 shares were the transferee of the shares of this case, and rejected some testimony by the plaintiff 1 and the witness.

2. Judgment on the third ground for appeal

Article 41-2 (1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) provides that in case where the actual owner and the nominal owner are different from each other, the value of the relevant property shall be deemed to have been donated to the actual owner on the date when the registration is made to the actual owner, notwithstanding Article 14 of the Framework Act on National Taxes, if the actual owner and the nominal owner are to transfer the right or exercise the right (hereinafter referred to as the "registration, etc."), and in this case, the transferee of shares may file a claim for the change of ownership against the company by proving that he/she acquired shares, and even if the shares are not issued, if the actual owner who acquired shares with the consent of another person makes a change of ownership in his/her name, the said provision on the donation shall apply.

In the same purport, the court below is just in holding that insofar as the plaintiff consented to the title trust of the non-party 1 and entered in the register of shareholders of the non-party company, regardless of the issuance of share certificates, it constitutes a deemed donation under the Inheritance Tax and Gift Tax Act, and there is no error in the misapprehension of legal principles as to

3. Judgment on ground of appeal No. 1

Article 60 of the Inheritance Tax and Gift Tax Act (hereinafter “the Inheritance Tax and Gift Tax Act”) provides that the value of donated property shall be calculated according to the supplementary assessment methods as stipulated in Articles 61 through 65 of the Act shall be limited to the case where it is difficult to calculate the market price as of the date of donation of donated property, and that it is difficult to calculate the market price shall bear the burden of proof against the defendant who is the tax authority. Under Article 60 (2) of the Act, the market price here includes the value recognized as normal where transactions are freely conducted between many and unspecified persons, and shall be recognized as the market price under the conditions as prescribed by the Presidential Decree such as expropriation, public sale price, appraisal price, etc., and Article 49 (1) and (2) of the former Inheritance Tax and Gift Tax Act (amended by the Presidential Decree No. 1660, Dec. 31, 199). 200; 3. "The market price is determined as the market price established by the Presidential Decree, which shall be determined as the market price of the pertinent property.

According to the reasoning of the judgment below, the court below acknowledged the facts as stated in its holding, and determined that the above transaction price on December 18, 1999, which was less than three months prior to the appraisal base date of the disposition of this case, was not the ordinary market price of the shares of the non-party company because it was a transaction involving the management right of the non-party company, and it was not the market price of the non-party company, and the above price was not the ordinary market price of the shares of the non-party company. The sale price within the above period (19,000 won per share) was less than 26,00 won per share (26,000 won per share) but it was difficult to determine that the above transaction price was the market price of the non-party company's shares calculated on December 5, 199, which was less than the market price of the non-party company's shares (40,511 won per share) and it was not the market price of the non-party company's shares calculated on December 18, 1998.

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error of law such as misunderstanding of legal principles as to the market price recognition of unlisted stocks as otherwise alleged in the ground of appeal (it is difficult to say that all sales cases recognized by the court below are the prices formed in the sales contract to secure the management right of the non-party company by making the non-party 1 a party and a third party as a party, and it is not the price formed through a normal transaction that properly reflects the objective exchange values of the non-party company's stocks. In particular, it is difficult to believe that the sale on December 5, 199 (19,00 won per share) on December 21, 199 (26,00 won per share) is true).

4. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-dam (Presiding Justice)