Where an attorney-at-law agreed to set the retainer payment and the payment date of the case, the time of business income (=the date agreed upon)

According to Article 28 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) and Article 57 (4) 7 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994), the receipt date of the total amount of business income from the provision of personal services shall be the date determined as the payment date of services pursuant to the agreement, but if the payment date is not determined by the agreement, the provision of personal services shall be completed. Thus, if an attorney agreed on the commencement date of the case, barring any special circumstance, it shall be deemed that there was the income equivalent to the commencement date of the contract. If the extinctive prescription of the retainer claim is completed, it is problematic whether it can be included in necessary expenses in the taxable year to which the expiration date of prescription belongs as bad debts.

Article 28 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) (see current Article 24), Article 57 (4) 7 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994) (see current Article 48 (8) of the former Income Tax Act)

Supreme Court Decision 87Nu46 delivered on August 18, 1987 (Gong1987, 1476) Supreme Court Decision 98Du3341 delivered on May 8, 1998

Plaintiff

The Director of Gangnam District Office

Seoul High Court Decision 97Gu51249 delivered on October 21, 1998

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

According to Article 28 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) and Article 57 (4) 7 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1467 of Dec. 31, 1994), the receipt date of the total amount of business income from the provision of personal services shall be the date determined by the agreement as the payment date for the provision of services, but if the payment date is not determined by the agreement, the provision of personal services shall be completed. Thus, if an attorney agreed on the commencement date of the case, barring any special circumstance, it shall be deemed that there was the income equivalent to the retainer payment on the agreed payment date, and if the extinctive prescription of the retainer payment has expired, it is a matter of whether it can be included in necessary expenses in the taxable year to which the expiration date of prescription belongs (see, e.g., Supreme Court Decisions 87Nu466, Aug. 18, 1987).

According to the reasoning of the judgment below, the court below rejected the Plaintiff’s assertion that the Plaintiff was unable to realize its income on the ground that: (a) the Plaintiff agreed to receive KRW 10,000,000 per case from the Non-Party, etc. at around 1991 upon delegation of the 90Gahap74747 and 91Gahap21799 on behalf of the Non-Party, etc. at around April 6, 1991; and (b) the Plaintiff was paid KRW 5,00,000 per case as the early payment on April 6, 1991; (c) even if the amount actually received by the Plaintiff as the early payment is limited to KRW 3,00,000,000, the right to receive the remainder of KRW 7,000 on the date of the above agreement shall be deemed to have been considerably mature and finalized; and (d) the extinctive prescription on the above claim of KRW 7,00,000 after the date of the agreement.

In light of the records, the above fact-finding and judgment of the court below are justified, and there is no error of law such as misunderstanding of facts against the rules of evidence, or misunderstanding of legal principles as to the occurrence of income, such as theory of lawsuit, etc.

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Seo Sung-sung (Presiding Justice)