Suwon District Court 2013Gudan15031, 2013

Imposition of capital gains tax on the establishment of transfer security rights under a sales contract with repurchase agreement;

The plaintiff entered into a sale and repurchase agreement on December 7, 2009 and completed the registration of ownership transfer for the above real estate, which was not the acquisition of the real estate of this case, and was established a security right for the real estate of this case as security. Thus, the disposition of imposition of capital gains tax should be revoked.

Article 14 of the Framework Act on National Taxes, Article 151 of the Income Tax Act

2013Nu46879 Revocation of Disposition of Imposing capital gains tax

United StatesA

Head of Namyang District Tax Office

Suwon District Court Decision 2013Gudan15031 Decided July 22, 2013

April 15, 2014

May 13, 2014

1. The plaintiff's appeal is dismissed.

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

1. Purport of claim

The judgment of the first instance is revoked, and the defendant revoked on February 6, 2012 against the plaintiff, KimA, JeonA, and JeonA.

capital gains tax of KRW 149,973,990 (including additional tax of KRW 40,078,781) is revoked

2. Purport of appeal

The same shall apply to the order.

1. Details of the disposition;

(a)transfer of the title of the former B’s real estate registration;

On December 11, 2009, JeonB, the father of the Plaintiff, completed the registration of ownership transfer on the ground of "sale with special agreement for repurchase" on December 7, 2009, and died on January 15, 2010.

The Defendant deemed BB to have transferred the instant real estate to the Plaintiff at a cost, and determined capital gains tax on BB on February 6, 2012 pursuant to Article 24 of the Framework Act on National Taxes, the Defendant determined and notified the Plaintiff, who was the heir of BB on February 6, 2012, as well as the Plaintiff, KimA, Jeon-A, and Jeon-A (hereinafter “Plaintiff, etc.”) of capital gains tax of 149,973,990 (including additional tax of 40,078,781) for the year 209.

C. The Plaintiff et al., dissatisfied with the instant disposition, filed a tax appeal with the Tax Tribunal, but was dismissed on October 30, 2012.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The formerB entered into a repurchase agreement with the Plaintiff on the instant real estate and completed the registration of transfer of ownership, but the formerB wanted to provide money to KimA, his spouse, but instead, it is difficult for the Plaintiff to dispose of the instant real estate or set up a security, instead of making it difficult for the former BB to sell the instant real estate or make it possible for BB to contribute money to KimA by lending money to the former B as security, which constitutes a transfer of security, and the instant disposition based on the premise that BB transferred the instant real estate to the Plaintiff is unlawful.

2) Even if the transaction between BB and the Plaintiff constitutes a transfer, the time when the transfer of the instant real estate was conducted after the formerB was later on January 18, 2010. As such, it constitutes a case where inheritance was already conducted before the transfer of the instant real estate, and the Plaintiff, etc. reported and paid the inheritance tax by including the instant real estate in the inherited property. Thus, the instant disposition imposing capital gains tax on the Plaintiff, etc. is unlawful.

3) Even if the formerB transferred the instant real estate to the Plaintiff, it is unlawful for the Defendant to impose capital gains tax as in the instant disposition, apart from the fact that the formerB and the Plaintiff constitute a gift since they were subordinate to the Plaintiff.

B. Relevant statutes

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

C. Determination

1) Facts of recognition

A) On December 6, 2009, the transfer contract between the Plaintiff and the BB between the Plaintiff and the BB was made between the BB and the Plaintiff on December 6, 2009, the agreement to transfer the instant real estate as security upon borrowing KRW 529,625,200 from the former BB creditor. ② The transfer of the instant real estate to the Plaintiff at the same time as the former BB was paid the said amount on the date of the contract, and the Plaintiff shall make the registration of repurchase to secure the principal and interest, and ③ the due date shall be determined by the agreement for repurchase. ③ The interest shall be 4% per annum; the due date shall be the last day of the year; ④ the Plaintiff may gratuitously use the instant real estate until the due date; ④ the Plaintiff shall be entitled to use the instant real estate until the due date; ⑤ When the payment of principal and interest was completed within the due date, the ownership of the instant real estate shall be reverted to the formerB, and if not paid or interest was paid at least twice, the Plaintiff may liquidate the instant real estate without delay.

B) On December 7, 2009 between the Plaintiff and the former BB, the real estate sales contract with the special agreement for repurchase between the Plaintiff and the former B, stating the following: (a) the real estate sales contract with the special agreement for repurchase between the Plaintiff and the former B on December 7, 2009; and (b) the seller (the former B) delivered the real estate to the buyer on December 7, 2009; (c) the sale price shall be paid at the same time as the registration is completed; (b) the sale price shall be the sum of the cost borne by the buyer (the Plaintiff); and (c) the period of repurchase shall be five years; and (c) the lease price of the real estate in this case shall be the sum of the purchase price to be paid by the buyer (the buyer) and the former B on December 7, 2009 between the former B and the KimA (the former B’s wife and the Plaintiff’s mother) on December 7, 2009.

D) The registration of transfer of ownership has been completed

On December 11, 2009, with respect to the instant real estate, the registration of ownership transfer was completed under the name of the Plaintiff on the ground of "sale with a special contract for repurchase" on December 7, 2009, and the registration was completed on the same day and a special contract for repurchase, such as the redemption price and the redemption period. On December 17, 2009, the Plaintiff reported to the Mayor of Namyang-ju that the actual transaction price was 529,625,200 won with respect to the instant father-dong mountain, and the terms and conditions of the contract and the term of the contract were e.) death before B and the account transfer transfer transfer transfer of the Plaintiff KimA with respect to the Plaintiff's money to the Plaintiff Kim Dong-dong was deceased on January 15, 2010.

On January 18, 2010, the Plaintiff borrowed 409,904,553 won from a national bank and transferred 409,000,000 won to the deposit account of KimA on the 20th of the same month. 2) Whether the transfer of security was made

Article 14(2) of the Framework Act on National Taxes provides that the provisions on the calculation of tax base in tax laws shall apply to the Plaintiff’s actual transfer of income, profit, property, act, or transaction, regardless of its title or form. Article 88 of the former Income Tax Act (amended by Act No. 10408, Dec. 27, 2010) provides that the transfer of assets refers to the actual transfer of assets at a cost by means of sale, exchange, investment in kind to a corporation, etc. regardless of the registration or enrollment of the assets, and Article 98(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22034, Feb. 18, 2010; hereinafter the same) provides that the Plaintiff’s transfer of real assets to secure repayment of the principal shall not be deemed to have been made only before the transfer of the transferred real assets to the Plaintiff by stating that the assets were transferred to secure repayment of the principal and interest between the Plaintiff and the former Enforcement Decree of the instant contract for transfer and transfer without consideration.

According to Article 98 of the former Income Tax Act and Article 162 (1) 2 of the former Enforcement Decree of the Income Tax Act, where an ownership transfer registration has been made prior to the settlement of transfer proceeds, the date of receipt of registration recorded in the register shall be deemed the date of asset transfer. Thus, as alleged by the Plaintiff, even if the Plaintiff paid the money under a contract with the archetype after the death of the archetype, or an agreement was reached between the Plaintiff and the remaining inheritors to inherit the above 56-1 land, the agreement was reached between the Plaintiff and the remaining inheritors on December 11, 2009, which was before the death of the formerB, and the ownership transfer registration of the instant real estate was made and the transaction between the Plaintiff and the Plaintiff was deemed to have been transferred, so long as the Defendant did not have any error in the disposition of this case, it is without merit

Meanwhile, the Plaintiff’s assertion that the inheritance tax and the acquisition tax, etc. were reported and paid in accordance with the above inheritance consultation is not acceptable as it goes against each of the descriptions of the following: (a) an inheritance tax investigation return (Evidence 6), the inheritance tax decision resolution (Evidence 7), and the gift tax decision resolution (Evidence 8).

4) As to whether this case is subject to gift tax, the issue is only whether the disposition of this case by the defendant is legitimate, and whether the transaction between the screening company and the plaintiff is subject to gift tax cannot be subject to examination in the lawsuit of this case. Thus, this part of the plaintiff's assertion is without merit without a separate review.

3. Conclusion

Therefore, the plaintiff's claim is dismissed, and the judgment of the court of first instance with the same conclusion is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.