If the principal and interest of a loan is paid in kind with land, propriety of taxation

Where the principal and interest of a loan is paid with land and cash, the interest income tax is lawful since the total amount of the value of land and cash exceeds the principal and interest of a loan even after a court requests the land paid in kind to the person

Article 24 of the Income Tax Act

Article 60 of the Inheritance Tax and Gift Tax Act: Principles, etc.

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of global income tax of KRW 58,818,190 as of December 26, 2003, and global income tax of KRW 138,053,260 as of November 8, 2003, and global income tax of KRW 2,848,540 as of November 8, 2003, shall be revoked.

1. Details of the disposition;

A. On April 195, 195, the limited partnership company ○○○ (hereinafter referred to as “○○”) was at the risk of losing the ownership of each real estate listed in the separate sheet owned by ○○○ (hereinafter referred to as “instant land”) due to an auction conducted with respect to each real estate listed on the separate sheet owned by ○○○ (hereinafter referred to as “instant land”), and if the Plaintiff lends money to the Plaintiff, it would suspend the above auction procedure, secure the ownership of the said land, thereby securing the ownership of the said land, and thereafter, offer to distribute part of the profits acquired from the expropriation of the said land to ○○○ (hereinafter referred to as “instant agreement”) by adding the leased principal to the leased principal when receiving the land compensation. In response, the Plaintiff reached an agreement with ○○○ by lending KRW 850,000,000 to ○○ around that time.

① The investment principal and profit to be repaid to the Plaintiff by ○○ is at least KRW 1,550,000,000. A provisional registration is made against the Plaintiff with respect to the instant land, and a promissory note with face value of KRW 1,550,000 is issued.

(2) The principal and interest of the investment shall be paid by May 30, 1996, which is due date for payment of promissory notes.

③ If the principal and interest cannot be repaid by December 31, 1996, applying the interest rate of 2% per month after the date of the above agreement, the principal registration on the instant land may be implemented based on provisional registration.

④ ○○○ shall immediately repay the loans from ○○ Bank and pay the Plaintiff a promissory note to the Plaintiff in cash, upon receiving the land compensation from ○○○○ City.

B. On September 24, 1997, ○○ received land compensation for part of the instant land from ○○ City, and repaid ○ Bank loans as part of which, and remitted 1,323,323,23,232 won to the Plaintiff’s bank account.

C. On July 8, 1998, when ○○ did not repay the remaining principal and interest of the loan to the Plaintiff in addition to the above amount paid in cash, the Plaintiff transferred the ownership of the instant land to the Plaintiff as payment in kind pursuant to the instant agreement. At the time, the Plaintiff and ○○ drafted a sales contract stating that the purchase price of the instant land shall be KRW 630,000,000.

D. As a result of the tax investigation with respect to ○○○, the Defendant discovered that ○○ borrowed money from the Plaintiff, for the purpose of paying the borrowed principal and interest, KRW 2,350,724,962 (cash 1,323,323,232 + the amount assessed as the officially assessed individual land price at the time of transaction, 1,027,401,730 + the amount assessed as the publicly assessed individual land price at the time of transaction, and said, on December 7, 2002, the Defendant corrected and notified the Plaintiff of KRW 81,207,080,080, total of KRW 1,400,724,962.

E. The plaintiff filed a reinvestigation on February 22, 2003 and filed an objection on February 22, 200. As a result, the defendant applied the rate of interest income to the leased principal accrued during the period from June 1, 1996 to July 8, 1998 as agreed upon by the agreement of this case, and then notified the plaintiff of the remaining amount of interest income for the said period as KRW 134,923,452, KRW 284,214,404, KRW 9,803,836, KRW 428,941,692, KRW 296, KRW 308, KRW 196, KRW 1986, KRW 196, KRW 298, KRW 196, KRW 196, KRW 308, KRW 196, KRW 198, KRW 298, KRW 196, KRW 298, KRW 196, KRW 297, KRW 29896.

[Ground of recognition] Facts without dispute, Gap evidence 3, Gap evidence 4 and 5, each of Gap evidence 1, Eul evidence 1-1 to 7, the purport of whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

(1) The Plaintiff and ○○○○ agreed to pay the loan by May 30, 1996, on the condition that ○○○○’s land was expropriated as planned as planned by the urban planning project and that the land compensation should be paid to ○○○○ prior to May 30, 1996, on condition that ○○ would be paid by the said deadline, but the said agreement between the Plaintiff and ○○○○ was invalidated on the ground that the said conditions were not paid by the said deadline, and that the said agreement was invalidated and the Plaintiff did not have received interest on the loan from ○○○ pursuant to the said agreement.

(2) However, the profits acquired by the Plaintiff from a monetary transaction with ○○○ shall be the remaining amount after deducting the leased principal from the total amount of the revenue amount of the instant land received in cash from ○○○○ and the revenue amount of the instant land in accord with ○○○○. Despite the fact that the Plaintiff and ○○○○ agreed on the transaction price for the instant land, the Defendant denied the fact that the Plaintiff agreed on the transaction price with ○○○○○ at the time of the transaction, and calculated the price of the instant land based on the publicly assessed individual land price at the time of the transaction and disposed of the instant land.

(3) Therefore, each of the dispositions of this case based on the mistake of facts is unlawful.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

(1) First, according to the facts in light of whether the agreement on the payment of interest under the agreement of this case was invalidated due to non-performance of the terms and conditions of the agreement of this case, the agreement of this case is deemed not to have an intent to invalidate the agreement of this case unless land expropriation compensation is paid by the agreed deadline prior to the agreed deadline for payment of the principal of loan and the profit accrued from the land expropriation, if 00 borrowed money from the plaintiff and the compensation is paid for the land of this case, the agreement of this case would distribute part of the principal of the loan and the profit accrued from the land expropriation to the plaintiff by the agreed deadline. However, this part of the plaintiff's assertion is without merit.

(2) Next, according to the provisions of Article 24 (1) and (2) of the Income Tax Act as to whether the purchase price stated in the above sales contract can be seen as the market price at the time of the transaction, the amount of revenue shall be calculated according to the market price at the time of the transaction, i.e., the market price at the time of the transaction, and Article 60 (2) of the Inheritance Tax and Gift Tax Act provides that the market price at the time of the transaction shall be the price that is generally accepted in the case of free transaction between many and unspecified persons, and the "market price" at this point means an objective exchange price formed in a normal transaction, but this is also a concept that includes the value assessed in an objective and reasonable manner. Thus, if there is no exchange price through a transaction, the appraisal price

Therefore, comprehensively taking account of the following facts: (a) No. 2 and 3 evidence of this case and the purport of the entire argument as a result of appraisal by the appraisal by the ○○ Certified Public Accountants on October 24, 2001; (b) the Plaintiff registered a collateral security with the joint collateral on the real estate indicated in the separate sheet No. 1 and No. 2; (c) the obligor and the mortgagee as the Plaintiff; (d) the transfer of the land in this case to the Plaintiff as a substitute payment; and (e) the Plaintiff did not specify the purchase price; (e) according to the appraisal by the ○○ Certified Public Accountants, the appraised value of the land in this case was assessed retroactively from ○○○ on July 8, 1998 on the premise that the appraised value of the land in this case was 1,06,672,000 won; and (e) the presumed price of the land in this case was 1,000 won not yet determined at the time of the exchange of ownership from ○○○ to substitute payment in kind; and 2500.

On the other hand, the reliable appraisal institution's appraisal price under Article 60 (2) of the Inheritance Tax and Gift Tax Act can also be deemed as the market price. The assessed value of the land of this case calculated as a result of the appraisal by ○○○ appraisal corporation's appraisal of the land of this case where the adequate appraisal was conducted in accordance with the relevant regulations can be deemed as the market price of the land of this case. If the assessed value of the land of this case exceeds KRW 1,323,323,323,232, the sum of the amounts the Plaintiff received from ○○○○ in cash, which the Plaintiff received as the repayment of principal and interest of the loan, is 2,329,95,232, which is the sum of the amounts the Plaintiff received as the repayment of principal and interest of the loan from ○○○○. Accordingly, the Defendant's dispositions of this case are without merit.

5. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Relevant Acts and subordinate statutes

Income Tax Act

Article 16 (Interest Income)

(1) Interest income shall be the following incomes generated in the current year:

Article 24 (Calculation of Total Amount of Income)

(1) The total income amount of a resident shall be calculated on the basis of the total amount received or to be received in the year concerned.

(2) In cases of paragraph (1), if any income other than money is imported, such income amount shall be calculated according to the value at the time of transaction.

Inheritance Tax and Gift Tax Act (wholly amended by Act No. 5193 on December 30, 1996)

Article 60 (Principles for Evaluation, etc.)

(1) The value of property on which an inheritance tax or gift tax is levied under this Act shall be the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as the “date of appraisal”). In such cases, the value appraised by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63 (2))

(2) The market price under paragraph (1) shall be the price which is generally accepted in cases of free trade between many and unspecified persons and shall include the price which is recognized as the market price under conditions prescribed by Presidential Decree, such as the expropriation and public auction price and appraisal

(3) In the application of paragraph (1), where it is difficult to compute the market price, the value assessed by the methods prescribed in Articles 61 through 65 in consideration of the type, scale, transaction status, etc. of the relevant property.

(4) In applying the provisions of paragraph (1), the value of the donated property to be added to the value of the inherited property pursuant to the provisions of Article 13 shall be the market price as of

Article 61 (Appraisal of Real Estate, etc.)

(1) Real estate shall be appraised by the methods prescribed in one of the following subparagraphs:

1. Land:

The officially assessed individual land price under the Public Notice of Values and Appraisal of Real Estate Act (hereinafter referred to as the "officially assessed individual land price"): Provided, That the value of the land for which no officially assessed individual land price exists shall be the amount appraised by the method as determined by the Presidential Decree in consideration of the officially assessed individual land price of neighboring similar land, and with respect to the land in the area prescribed by the Presidential Decree