Cho-2018-China-2037 ( October 05, 2018)

In order to become a debt to be deducted from the value of inherited property, it should be sure that the decedent has to pay ultimately at the time of the commencement of the inheritance.

The amount of debts deducted from the value of inherited property refers to the debts for which it is deemed certain that the decedent has to pay ultimately at the time of the commencement of the inheritance.

Article 14 of the Inheritance Tax and Gift Tax Act

2019Guhap60081 Revocation of Disposition of Imposition of Inheritance Tax

OO et al. and three others

O Head of tax office

March 13, 2019

March 27, 2019

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

The Defendant’s disposition of imposition of the inheritance tax OOO as to the Plaintiffs shall be revoked.

1. Details of the disposition;

A. The Plaintiffs are co-inheritorss of AAA (hereinafter referred to as “the inheritee”). The Plaintiffs reported and paid the inheritance deduction amount, including OOO, the amount of debt owed to Plaintiff BB of the inheritee ( principal OO and interest OOB; hereinafter referred to as “instant disputed debt”), OOO, the inheritance tax amount of inheritance deduction amount of KRW OO, and the inheritance tax amount of KRW OOO, the inheritance tax amount of KRW 200,000,000,000,000 for inheritance tax.

B. From 2017O.O.O. to 2017O.O.O.O.O., to 2017, the director of the regional tax office determined otherwise the basic facts of taxation, such as denying the deduction of the debt of this case from the value of inherited property by conducting an inheritance tax investigation on the decedent, and determined otherwise, he/she additionally decided and notified the Plaintiffs of the inheritance tax OOO of the inheritance tax (hereinafter “instant disposition”).

C. Plaintiff BB was dissatisfied with this and filed an appeal with the Tax Tribunal on 2018O.O.O., but was dismissed on 2018O.O.O.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 through 3, Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

The disposition of this case, which was taken without deducting the above debt from the value of the inherited property, should be revoked as it is unlawful since the decedent actually bears the obligation to Plaintiff BB at the time of the inheritance commencement.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) The decedent, the Plaintiff BB, and the CCC secured the obligation of loans to the Federation of DDD Co., Ltd. (hereinafter “DDD”) (hereinafter “the obligation of loans”), and completed the registration of creation of a mortgage with respect to the land of ten parcels, including the OO-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O

2) With delay in the payment of interest on the above loans, etc., the Association of Korea of OB made payments to the inheritees, Plaintiff BB, and CCC for the debt obligations of DD loans from O.O.O. to O.O.O.O.O., 200. For this purpose, Plaintiff BB used OB loans from O.O.O., and used OB loans from Plaintiff BB for the repayment of the debt obligations of DB. In order to secure Plaintiff BB’s loan obligations, the establishment of a mortgage was completed with respect to each of the above real estate under the name of the inheritees, the maximum debt amount, the debtor, Plaintiff BB, and CCC by O.O.O., 201.

3) Around 2001, the decedent, the Plaintiff BB, and the CCC filed a lawsuit against the EE that jointly and severally guaranteed the above loans of DD and DD, seeking reimbursement of the amount equivalent to the loans subrogated by them fromO.O. toO.O.O.O.O.O.O., 2001. The OO.O.O.O.DD and EE were jointly and severally liable for payment of the amount equivalent to the loans subrogated by them.

4) The FFF Co., Ltd. (hereinafter referred to as the “FFFF”) entered into an agreement with the decedent on 2002O.O.O., on the assumption of the obligation between the FFFF and the decedent, that FF will exempt the decedent from the obligation OO.O., and that FF will complete the registration of the establishment of a mortgage on the FF-owned real estate. Accordingly, the registration of the establishment of a mortgage on the FF-owned real estate was completed upon the application of the senior mortgagee, with respect to the foregoing real estate owned by FF-owned property, the decedent could not receive dividends from the said voluntary auction procedure.

5) The decedent prepared and rendered the following debt certificates to the effect that he/she bears the obligation of this case against Plaintiff BB. 2016O.O.O.

1. At around 1998, I provided a water guarantee for a loan to DD O cooperatives, the OO of which was owned by IO also for OO of O of O of O of O of O of O of O of O of O of O of O of O of O ofO of O of O of O of O of O of O of O of O of

2. DDR failed to repay the principal and interest of ODRs, and ODR tried to sell its own land by auction.

3. In order to prevent auction, the principal intended to repay the debt of the DD on behalf of the principal, and the principal is under circumstances in which the loan could not be made, and thus, he paid the debt of DD on behalf of the Plaintiff BB by obtaining the loan from the Plaintiff around 2001.

4. The principal confirms that the Plaintiff BB owes the obligation to repay to the Plaintiff BB, on his behalf, the principal OO only and the interest OOB paid by BB up to 201 O.O.O.O., 2015.

[Reasons for Recognition] Facts without dispute, entry of Gap evidence Nos. 4 through 16, the purport of the whole pleadings

D. Determination

1) The obligation of the inheritee to be deducted from the value of inherited property pursuant to Article 14(1)3 of the Inheritance Tax and Gift Tax Act, and Article 10(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act at the time of commencement

The term “a debt for which an ancestor ultimately bears the obligation to perform” refers to a debt which is deemed certain, and such reason belongs to a special reason that exceptionally affects the determination of the taxable value of inherited property, and thus, the burden of assertion and proof of existence lies in the person liable for duty payment who contests the taxable value (see, e.g., Supreme Court Decisions 83Nu410, Dec. 13, 1983; 2003Du9886, Sept. 24, 2004).

2) According to the evidence evidence Nos. 6, 9, and 16, FF, a partner of the inheritee, was found to have been liable for the debt incurred in the process of establishing DD. Of the Plaintiff BB’s debt, the OO member was used to pay for the debt of DD, the FF, a discharge of liability for DD’s indemnity, completed the registration of creation of a mortgage on the part of the inheritee as a collateral security holder to secure this. The fact that the inheritee prepared and completed the debt confirmation document with the effect that the inheritee was responsible for the debt of this case to Plaintiff BB on O.O.O., 2016. However, in full view of the facts or circumstances acknowledged earlier, the evidence was insufficient to acknowledge that the Defendant was liable for the debt of this case to the Plaintiff B at the time of the commencement of the inheritance.

A) Although the inherited property value had considerable property to the OOB, there was no fact that the decedent paid interest on the instant obligation to the Plaintiff BB prior to the death of the decedent or repaid the principal and interest on the instant obligation to the Plaintiff BB’s loan. Moreover, there is no circumstance that Plaintiff BB requested the decedent to repay the instant obligation to the decedent, other than the 2016 O.O.O.’s debt certificate prepared five months prior to the death of the decedent.

B) Although the Plaintiffs asserted that Plaintiff BB had difficulty in granting a loan under the name of the inheritee at the time of receiving the loan from 2001O.O.O.O.O., and there was no reasonable explanation of the specific content or any evidence to prove the specific content (and even after the above date, the inheritee received a loan of KRW 10,00,00 from 20O.O.O.,O.O., 203,O.O., 2013, and O.O., 2014).

C) Since the real estate owned by the deceased as well as the real estate owned by the plaintiff BB was provided as security for the debt of the loan of the DD, the plaintiff BB, a surety, has a reasonable motive to pay the debt of the plaintiff BB in his own name to pay the debt of the DD by subrogation or to do so.

D) On or around 2001 and around 2003, Plaintiff BB filed a lawsuit seeking reimbursement from the decedent, Plaintiff CCC, etc. for reimbursement of damages arising from the subrogation of DD’s loan. On or around 2004, Plaintiff BB filed a lawsuit seeking reimbursement against HH corporation by asserting that DD has a claim for damages or restitution of unjust enrichment against HH corporation, and that DD has a claim for reimbursement of damages or restitution of unjust enrichment against DD’s above claim against HH corporation. In other words, Plaintiff BB also made efforts to recover claims together with the decedent. As such, it is difficult to view that the Defendant had a real burden solely on the assumption of obligations between the decedent and FF as seen earlier.

3) Therefore, the Plaintiffs’ assertion that the instant obligation ought to be deducted from the inherited property value is justifiable, and thus, the Defendant’s disposition of this case is lawful.

3. Conclusion

If so, all of the plaintiffs' claims are without merit, they are dismissed. It is so decided as per Disposition.