Cho High Court Decision 2008 Jeon 4031 (Law No. 902.06)

Persons liable to pay capital gains tax on title trust real estate

In the event of title trust of real estate with a third party, if the title truster transfers the real estate to the third party and the income accrued from such transfer was reverted to the title truster, the person liable to pay the capital gains tax is not the title trustee

The contents of the decision shall be the same as attached.

Article 96 (Value of Transfer)

Article 97 (Calculation of Necessary Expenses in Transfer Income Tax of the Gu)

1. The Defendant’s disposition of imposition of capital gains tax of KRW 57,264,063 against the Plaintiff on May 8, 2008 shall be revoked.

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

The same shall apply to the order.

1. Circumstances of the disposition;

가. ① 청주시 상당구 ☆☆동 177-17 대 693㎡(이하 '이 사건 경매토지'라 한다) 및 위 지상 경량철골조 0.45T칼라강판지붕 단층 근린생활시설 137.9㎡(이하 '이 사건 건물 '이라 한다)에 관하여 청주지방법원 96타경7635호로 부동산임의경매절차가 진행되었다. 이 사건 경매토지 및 건물은 1997. 2. 6. 원고에게 85,590,000원에 낙찰되어 1997. 4. 1. 원고 앞으로 소유권이전등기가 경료 되었다. ② 청주시 상당구 ☆☆동 177-22 임야 291㎡(이하 '이 사건 임야'라 한다)는 김★★의 소유였다가 1997. 10. 20. 매매를 원인으로 하여 1997. 11. 25. 원고 앞으로 소유권이전등기가 경료 되었다.

B. On November 12, 1997, the head of ○○○ completed the registration of ownership transfer on November 26, 1997 after purchasing 533 square meters of the instant auction land and the instant building. ② On November 24, 1997, after purchasing the instant forest land, he completed the registration of ownership transfer on December 3, 1997 (hereinafter “the entire real estate transferred to ○○○○”). As to the transfer of the instant real estate, the acquisition value was 65,048,400 won, and the transfer value was 57,00,000,000 won and the transfer value was 57,000,000 won.

C. After the transfer of the instant real estate to another person on June 20, 2003, the head of ○○ stated that the transfer income tax of the instant real estate was KRW 57,00,000, which was the amount at the time of filing a report on the transfer income tax under the Plaintiff’s name, and that it was much much more than KRW 1,80,000,000. The Defendant stated that the transfer value at the time of filing a report on the transfer income tax under the Plaintiff’s name was underreported. On May 8, 2008, the Defendant confirmed that the transfer value of the instant real estate was 180,000,000, and the acquisition value was 85,590,000 won for the said successful bid price multiplied by the ratio of the land size (533 square meters/693 square meters) of the said successful bid price to KRW 65,828,961,00,000, which was charged to the Plaintiff.

[Ground of recognition] Unsatisfy, Gap evidence 2 through 4, Eul evidence 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the disposition is proper; and

A. The plaintiff's principal

(1) Since all transactions on the instant real estate were conducted by the Plaintiff’s ASEAN (Death on January 15, 2002), it is unlawful to impose capital gains tax on the Plaintiff under the principle of substantial taxation.

(2) 5 years have already elapsed since the exclusion period for the imposition of capital gains tax.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Taxpayers of capital gains tax

If a title truster transfers real estate to a third party and income accrued from such transfer was attributed to a title truster, the taxpayer of the relevant capital gains tax under the de facto taxation principle stipulated in Article 14(1) of the Framework Act on National Taxes is not a person liable to pay the said capital gains tax (see, e.g., Supreme Court Decision 93Nu517, Sept. 24, 1993). In such a case, even if the related parties are subject to sanctions on the grounds that the relevant parties violated the regulations under the laws and regulations on the de facto real name transaction, the outcome of attribution of tax liability does not vary.

The following facts are established by comprehensively taking account of the Plaintiff’s testimony on the evidence No. 5, Kim Ba’s testimony, the domestic agricultural cooperative head of this court, and the purport of the order to provide financial transaction information to the president of YB. According to the Plaintiff’s order: 3,000 won, 3,000 won was invested in the Plaintiff’s network, and thus, 1,000 won was awarded a successful bid for the auction real estate; 2,000 won was sold to the other; and 3,000 won was sold to the head of this case after the Plaintiff’s use of the Plaintiff’s name as his father, and 9,000 won was sold to the head of this case’s ○○; 3,000 won was sold to the Plaintiff; 9,000 won was then 1,000 won, including 3,000 won, and 97,000 won was distributed to the Plaintiff’s account no later than 97,000 won.

(2) Calculation of acquisition value

In calculating the transfer income tax of this case ex officio, the acquisition value shall be calculated appropriately.

Under Article 100 (2) of the former Income Tax Act (amended by Act No. 6051 of Dec. 28, 1999), the auction land and the building of this case were partially divided, but the building of this case was transferred as it was awarded a successful bid. However, the defendant calculated the acquisition value by multiplying the successful bid price of the entire auction real estate including the building of this case by the ratio of the site area (=533m203m2) of the entire auction real estate to the successful bid price of this case, which is included in the building of this case without any justifiable ground. Accordingly, the acquisition value of the building of this case was excessively calculated and caused an excessive imposition of capital gains tax. In such a case, the acquisition value of the land of this case and the building of this case shall be calculated based on the standard market price at the time of acquisition [the acquisition value shall be calculated based on the standard market price at the time of acquisition, in cases where the acquisition value is calculated based on the actual transaction price and the land and the building, etc. are transferred together, and the land of this case shall be calculated based on the actual price.

(3) Sub-decisions

The disposition of this case was erroneously designated as a taxpayer, and since the calculation of capital gains tax was erroneous, it is deemed as unlawful.

3. Conclusion

For the claimant;