National Tax Service Examination Transfer 2010-0362 ( October 22, 2011)

The amount of a lease deposit with no opposing power shall not be deducted from the transfer value.

It is difficult to say that the rental deposit returned by the successful bidder of the real estate subject to the right of lease with no opposing power is the amount deducted from the transfer value as the payment is made under the condition that the successful bidder is not liable for payment or is paid for a reason different from the acquisition of the real estate

2011Gudan1519 Revocation of Disposition of Imposing capital gains tax

The two AA

Head of the High Tax Office

November 14, 2011

November 28, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of KRW 309,719,560 against the Plaintiff on October 25, 2010 shall be revoked.

1. Details of the disposition;

A. On April 3, 2008, the Plaintiff acquired 000 units of OBB building 000 and 0000 units of land BB building on two parcels (hereinafter “instant building”) from public sale, and transferred on June 12, 2008 to five persons, including KimCC.

B. On May 31, 2009, the Plaintiff declared to the Defendant on May 31, 2009, the transfer income tax of KRW 359,000,000 calculated by applying the transfer value of KRW 8 billion based on the actual transaction value, KRW 4.72,9 billion in acquisition value, KRW 3.26 billion in necessary expenses, and KRW 6 billion in necessary expenses

C. However, in relation to the instant building, the Defendant calculated gains on transfer by excluding from the necessary expenses for the reason that the Plaintiff’s rental deposit 490 million won paid to the lessee (ju), Dlock (hereinafter “Dlwork”) was an increase in the lease deposit for the right of lease without opposing power. On October 25, 2010, the Defendant issued the instant disposition to correct and notify the Plaintiff of the transfer income tax of 309,719,560 as the amount reverted to 2008.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, 7, Eul evidence 1 and 2, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff acquired the instant building for the purpose of resale to a third party. To perform the obligations under the contract of transfer, the Plaintiff agreed to pay deposit of KRW 500 million to Dwork, a lessee of the instant building, for the payment of KRW 490 million, and received delivery of the instant building after paying KRW 490 million to Dwork, which is the lessee of the instant building. The cost incurred in the process of performing the contract of transfer constitutes necessary expenses even if it is not legally payable to the transferor. Therefore, the Plaintiff’s disposition of the instant building was unlawful, given that the cost spent during the process of performing the contract of transfer should be deducted from the transfer value as necessary expenses when calculating the transfer income tax, since it was inevitable to transfer the instant building to the lessee.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

As the successful bidder of real estate over which the opposing power has been returned to the lessee can be seen as the price required for the acquisition of the above real estate, it is reasonable to calculate this as the acquisition value of the real estate (see Supreme Court Decision 92Nu11954, Oct. 27, 192). However, as the successful bidder of real estate over which the opposing power has not been paid the lease deposit returned to the lessee for reasons different from the acquisition of the real estate, it is difficult to say that the deposit is the money that can be deducted from the acquisition value or transfer cost of the real estate in calculating the transfer income tax. Considering the overall purport of arguments as to the above 400 million won, Korea-E, the former owner of the building of this case, was also liable for the above 500 million won, and it is difficult to recognize that the Plaintiff paid the lease deposit of this case to the other owner of the building under the opposing power of 500,000,000 won for the reason that the deposit was not paid to the other owner of this case.

3. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.