Where the acquisition value is unclear in the calculation of capital gains tax, the acquisition value shall be determined by the conversion price.

It is reasonable to recognize that the Defendant’s acquisition value as the conversion price is the conversion price on the ground that it is not reliable in the contents of the sales contract of this case, which is submitted as evidence of actual transaction price, and there is no other method to verify actual transaction price.

Article 97 of the Income Tax Act

2017Gudan56974 Revocation of Disposition of Imposing capital gains tax

AA

BB Director of the Tax Office

March 20, 2018

April 27, 2018

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 98,402,440 (including additional tax) for the year 2015, which was imposed on the Plaintiff on November 1, 2016, is revoked (the date of disposition stated in the complaint’s claim appears to have been written in writing on November 11, 2016).

1. Details of the disposition;

A. On November 21, 1998, the Plaintiff acquired and owned ○○○○○○○○○○ ○○, *****” the instant forest (hereinafter referred to as “the instant forest”) from CCC and DD on November 21, 1998. On December 9, 2015, the Plaintiff transferred the instant forest (hereinafter referred to as “the instant transfer”). On February 29, 2016, the transfer value was ***,00,000, acquisition value was **,000,000 KRW *,000,000, the transfer income tax base and tax amount was reported and paid.

B. After conducting a tax investigation on the transfer of the instant forest from June 13, 2016 to September 28, 2016, the Defendant: (a) determined the acquisition value reported by the Plaintiff pursuant to Article 114(7) of the former Income Tax Act (amended by Act No. 14389, Dec. 20, 2016; hereinafter the same shall apply) as the transfer value x***,724 won [Conversion value x transfer value x officially announced land price at the time of acquisition / (officially announced land price at the time of acquisition / (officially announced land price at the time of acquisition / (officially announced land price at the time of transfer /) 1); and (b) disposed of the transfer income tax for the Plaintiff on November 1, 2016 as the actual transaction price at the time of acquisition * (including additional tax for 2015).

C. On November 11, 2016, the Plaintiff dissatisfied with the instant disposition, filed an appeal with the Tax Tribunal, but the Tax Tribunal dismissed the Plaintiff’s appeal on March 15, 2017.

[Ground of recognition] Facts without dispute, Gap evidence 1, 3, 4, Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The sales contract of this case is not a false contract. The plaintiff actually purchased the forest of this case in ***,000,000 and paid all the above sales amount in cash. The disposition of this case made on a different premise is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) Comprehensively taking account of the relevant provisions such as Article 97(1)1, Article 114(2), 4, and (7) of the former Income Tax Act and Article 176-2(1) through (3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26982, Feb. 17, 2016; hereinafter the same), in calculating gains on the transfer of land, the acquisition value deductible from the transfer value shall be the actual transaction value incurred in acquiring assets; however, in cases where the account books, sales contracts, receipts, and other documentary evidence necessary to confirm the actual transaction value at the time of acquisition do not exist or where it is impossible to recognize or confirm the actual transaction value at the time of acquisition of the relevant assets due to account books or other documentary evidence, such as where there is no book, sales contract, receipt, or other documentary evidence necessary to verify the actual transaction value at the time of acquisition, the transfer margin of land may be determined or corrected by applying the acquisition value

Meanwhile, in a case where a taxpayer submitted a sales contract, etc. on acquisition as documentary evidence related to the actual transaction price, the tax authority should calculate gains on transfer based on the actual transaction price under the sales contract, barring special circumstances such as where the sales contract, etc. was prepared differently from the actual transaction price, and in such a case, the tax authority should prove that there are such special circumstances (see, e.g., Supreme Court Decision 95Nu3183, Jun. 25, 1996). However, in a case where the credibility of documentary evidence submitted, such as where the actual transaction price claimed by the taxpayer is significantly different from the standard market price or the ordinary transaction amount, is difficult to be easily reliance in light of the general transaction practices, it is difficult for the taxpayer to prove that there is a special circumstance where the actual transaction price cannot be confirmed with the submitted documentary evidence (see, e.g., Supreme Court Decision 96Nu5810, Jun. 27, 197).

2) In light of the above legal principles, comprehensively taking account of the following circumstances, which can be seen by adding the purport of the entire pleadings to the entries in the health zone, Gap evidence Nos. 1, 4, Eul evidence Nos. 2, 3, and 5 through 7, the defendant cannot be deemed to have committed any error regarding the fact that the defendant, in relation to the acquisition value of forest and field of this case, is not reliable in the entries in the sales contract of this case submitted as evidence of actual transaction price, and there is no other way to verify actual transaction price, and that the acquisition price is recognized as the conversion price. The disposition of this case is lawful,

A) When the Plaintiff reported and paid the registration tax on the forest of this case in 198 through 1999, the Plaintiff voluntarily acquired the forest of this case at “15,00,000 won.” The officially announced land price as of January 1, 1998 is 5,350 square meters per square meter, and the acquisition price (**,00,000,00) alleged by the Plaintiff is 14 times the assessment standard value of the registration tax on the forest of this case as of January 1, 1998 and the officially announced land price (*,586,350 won = 5,350 won x 3,61 square meters x 61 square meters) exceeding 11 times the assessment standard value of the registration tax on the forest of this case (**,00,000,000 won). However, the Plaintiff did not present the appraisal value of the forest of this case as of January 1, 2015 at least 200 square meters of the land of this case.

B) The sales contract (No. 2) of this case states the purchase price of the forest of this case as **,000,000 won (contract payment *0,000,000 won in the contract payment *00,000 won in the intermediate payment *00,000,000 won in the contract payment *0,000,000 won in the intermediate payment *0,000,000 won in the balance *0,000, November 16, 1998). However, upon examining the details of transactions in the Plaintiff’s account (Evidence No. 7) in the Plaintiff’s account, there is no objective evidence to verify the fact that the money was paid to the actual seller, such as receipts or financial evidence prepared at the time.

As to this, the Plaintiff alleged that all of the above sales price was paid in cash that the Plaintiff had not deposited in a financial institution, and that there was sufficient economic contribution to the Plaintiff at the time. However, in light of the general trade practice, the receipt of all of the sales price exceeding KRW 200 million in cash was considerably exceptional even in light of the Plaintiff’s assertion, and even according to the Plaintiff’s assertion, the Plaintiff obtained income from a little amount of KRW 200 million each in 197 and 1998. However, the Plaintiff’s assertion that a large amount of money up to the annual income was possessed in cash without depositing in a financial institution, and all of them were used as the purchase fund of the forest land in this case is not easy, nor can it be inferred that the Plaintiff actually paid the acquisition price reported by the Plaintiff on the ground that the Plaintiff had a sufficient means to purchase the forest land in this case.

C) In addition, the plaintiff himself has prepared two different sales contracts concerning the acquisition of forest land of this case (the plaintiff is stated in the sales contract of this case as " October 23, 1998". Unlike the fact that the date of the sales contract of this case is stated as "Occ. 23, 1998", it is argued that the cause of registration for the transfer of ownership in the copy of the registration of this case is due to the fact that the plaintiff prepared the above one-day contract to pay less cost and registration tax at the time for the plaintiff to pay less cost and registration tax). In the case where multiple sales contracts are prepared in relation to a single real estate transaction, it is inevitable to determine which of this case is true in light of all the circumstances including the details of payment for purchase which is objectively verified or the content of the contract execution. Rather, the sale contract of this case is written as "CC," and the seller's name or seal of this case is written as "AC," and the seller's name or seal of this case is omitted.

라) 한편, 이 사건 양도에 관한 세무조사 과정에서, CCC은 2016. 6. 28. '오래 전일이라 구체적인 내용은 모르겠으나, 대략 평당 20만 원에 매도하였던 것으로 기억되고, 대금은 현금으로 서너 차례 나누어 받았던 것으로 기억한다.'는 내용의 확인서를 작성ㆍ제출하였고, DDD은 2016. 7. 11. '절친한 고향선배인 CCC과 이 사건 임야를 함께 샀는데, 1997년도에 CCC이 부도가 나면서 땅을 팔자고 하기에 CCC에게 알아서 하라고 인감증명서와 인감도장을 주었다. 얼마에 팔았는지 나는 관여하지 않았고, 오랜 세월이 흘러 기억이 잘 나지 않았는데, 이번에 전화해보니 ○억 원 정도에 팔았다고 한다.'는 내용의 확인서를 작성ㆍ제출하였다. 그러나 위 각 확인서의 내용은 이를 뒷받침할 만한 객관적인 자료가 전혀 없을 뿐만 아니라, 특히 가액이 ○억 원을 상회하는 자신 소유의 토지 지분을 매도하는 과정에 전혀 관여하지 않았고, 당시 매매대금이 얼마인지도 몰랐다는 DDD의 진술은 그 자체로 믿기 어려운바, 위 각 확인서만으로는 원고가 이 사건 임야를 실제 220,000,000원에 취득하였다고 인정할 수 없다.

3. Conclusion

The plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.

Related Acts and subordinate statutes

(1) The former Income Tax Act (Amended by Act No. 14389, Dec. 20, 2016)

Article 97 (Calculation of Necessary Expenses in Transfer Income)

(1) Necessary expenses to be deducted from the transfer value when calculating gains on transfer of a resident shall be as follows:

1. Acquisition value:

(a) The actual transaction price incurred in the acquisition of assets under subparagraphs of Article 94 (1): Provided, That in cases falling under the part other than subparagraphs of Article 96 (2), the standard market price at the time of such acquisition;

(b) Where it is impossible to confirm the actual transaction value at the time of acquisition in cases falling under the main sentence of item (a), Article 114 (Determination, Revision and Notice of Tax Base of Transfer Income and Amount of Tax) (2) Where any omission or error exists in the details of a return made by a person who makes a preliminary return pursuant to Article 105 or a person who makes a final return pursuant to Article 110, the head of a tax office or the

(4) The head of a regional tax office or the head of a regional tax office having jurisdiction over the place of tax payment shall, when he/she determines or revises the tax base for transfer income and the amount of tax pursuant to paragraphs (1) through (3), comply with the values under Articles 96,

(7) In applying paragraphs (4) through (6), where the transfer value or acquisition value is determined based on the actual transaction value and where it is impossible to recognize or confirm the actual transaction value at the time of transfer or acquisition of the relevant assets by the books or other evidentiary documents due to the reasons prescribed by Presidential Decree, the transfer value or acquisition value may be determined or corrected by making a estimated survey in accordance with the transaction example value, appraised value, conversion value (referring to the acquisition value converted by the actual transaction value, transaction example value or appraisal value by the method prescribed by Presidential Decree), or the

(1) The former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26982, Feb. 17, 2016)

Article 163 (Necessary Expenses for Transferred Assets)

(12) The value of transaction example, appraisal value, or conversion value prescribed by Presidential Decree in Article 97 (1) 1 (b) of the Act means the value provided for in Article 176-2 (2) through (4).

Article 176-2 (Estimated Decision and Revision)

(1) "Grounds prescribed by Presidential Decree" in Article 114 (7) of the Act means cases falling under any of the following subparagraphs:

1. Where there are no books, sales contracts, receipts, and other evidential documents necessary to confirm the actual transaction price at the time of transfer or acquisition, or important parts are incomplete;

2. Where the details of a book, sales contract, receipt, and other documentary evidence are obviously false in light of the transaction example value, appraisal value appraised by an appraisal business operator defined in subparagraph 9 of Article 2 of the Public Notice of Values and Appraisal of Real Estate Act (hereafter in this Article, referred to

(2) The term "acquisition price converted by a method prescribed by Presidential Decree in Article 114 (7) of the Act means the acquisition price converted by any of the following methods:

1. In the case of stocks, etc. under Article 94 (1) 3 of the Act or other assets under Article 94 (1) 4 of the Act, the amount calculated by the following formula:

2. In cases of the rights to acquire the land, buildings and real estate under Article 96 (1) and (2) 1 through 9 of the Act (the provisions of subparagraph 6 shall apply only to the assets acquired before a fictitious acquisition date under paragraph (4)), the amount calculated by the following formula:

(3) Where the transfer value or acquisition value is estimated, or revised pursuant to Article 114 (7) of the Act, the amount calculated by applying the following methods in sequential order (in cases of preemptive rights, subparagraph 3 shall not apply): Provided, That where the transaction example value under subparagraph 1 or the appraisal value under subparagraph 2 is deemed objectively unfair and unfair, such as the price arising from a transaction with a specially related person under Article 98 (1), the relevant amount shall not

1. Where there are trading examples of assets bearing the identity or similarity with the relevant assets (excluding stocks, etc. of stock-listed corporations) within three months before and after the date of transfer or acquisition respectively, such value;

2. Where there exist the appraisal prices (limited to those whose standard date of appraisal is within three months before and after the date of transfer or acquisition respectively) appraised by two or more appraisal business entities on the relevant assets (excluding stocks, etc.) within three months before and after the date of transfer or acquisition respectively, the average value of such appraisal prices;

3. Acquisition price converted under paragraph (2); and

4. The standard market price.

The original shall be authentic.

April 27, 2018