The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Whether Article 40(1)1(b) and Article 40(1)2(b) of the former Inheritance Tax and Gift Tax Act apply (ground of appeal No. 1)

A. Article 40(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11609, Jan. 1, 2013; Article 40 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 1357, Dec. 15, 2015; hereinafter “former Inheritance Tax Act”) provides that “where a person acquires or transfers convertible bonds, bonds with warrant (referring to warrant certificates where warrant certificates are separated) or bonds entitled to take over stocks by converting into, exchanging with, or taking over stocks with, convertible bonds or other stocks (hereinafter “convertible bonds, etc.”) or obtains any of the following profits by converting into, exchanging, or taking over stocks with, convertible bonds, etc., he/she shall be deemed the value of property donated to the person who has acquired such profits, the amount equivalent to the profits shall be deemed the value of property donated to the person who has acquired such profits by taking over or exchanging stocks with the stocks (including cases where the largest shareholder of the corporation that issued convertible bonds, etc. or his/her specially related person, obtains profits from the corporation in proportion to the stocks issued.”

B. The lower court’s adopted evidence.