In cases where there exists the residual property of an association for which the heir can claim a refund at the time of commencing the inheritance, whether the obligation of the association, arising before the predecessor withdraws from the association due to the death of the predecessor, is excluded from the value of the inherited property (affirmative)

In cases where there exists any residual property of a cooperative for which an heir can claim a refund at the time of commencement of inheritance, the amount of obligations of the cooperative incurred prior to withdrawal from the cooperative due to the death of the decedent shall be excluded from the amount of the inherited property according to the calculation due to withdrawal. In addition, notwithstanding the calculation due to withdrawal, the heir still bears the amount equivalent to the shares of the decedent among the above obligations of the cooperative with the cooperative. However, barring any special circumstance, barring any special circumstance, it cannot be deemed a financial obligation to be deducted when calculating the value of the net financial property (the value of the inherited property less the financial obligation from the value of the inherited property) from the inheritance deduction of the financial property,

Article 22(1) of the Inheritance Tax and Gift Tax Act; Articles 717 and 719(1) and (2) of the Civil Act

[Judgment of the court below]

The Director of the sericultural Tax Office

Seoul High Court Decision 2015Nu51561 decided November 25, 2015

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

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. Article 60(1) of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 22579, Dec. 30, 2010) provides that the value of the property on which the inheritance tax is levied shall be based on the market value as of the date on which the inheritance commences. Paragraph (2) provides that “The market value under the provisions of paragraph (1) shall be the value generally deemed to be established when a transaction is made freely between many and unspecified persons and shall include the expropriation price, public sale price, appraisal price, etc. which is recognized to be the market value as prescribed by Presidential Decree.” The main sentence of Article 49(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 22579, Dec. 30, 2010) provides that “Where the relevant property is traded, the transaction value shall be excluded from cases where it is objectively deemed to be unfair, such as the transaction value with a person with a special relationship.” Meanwhile, Article 60(3) of the Inheritance Tax and Gift Tax Act provides that “the market value shall be calculated from the relevant property value.”

Therefore, in the case of unlisted stocks with less market value, if there is a transaction example, the value of the stocks shall be evaluated as the market value and the value of the stocks shall not be evaluated by supplementary evaluation methods stipulated in the Inheritance and Gift Tax Act. However, since the market value refers to the objective exchange price formed by the general and normal transaction, in order to be recognized as the market value, the circumstances that can be seen as properly reflecting the objective exchange value at the time the relevant transaction commenced in a general and normal manner should be acknowledged (see Supreme Court Decision 2010Du26988, Apr. 26, 2012, etc.).

B. After finding the facts as indicated in its reasoning based on its adopted evidence, the lower court determined that the instant disposition was unlawful on a different premise on the ground that: (a) the price purchased by the ○○ Construction to retire shares from other shareholders prior to the commencement of the inheritance with respect to shares issued by the ○○ Construction Comprehensive Certified architect (hereinafter “○○ Construction”) among inherited property and the 1/2 shares of the 1/2 shares of the 1/2 shares of the ○○ Construction Construction among inherited property; (b) the price of the ○ Construction purchased by the ○ Construction to retire shares from other shareholders prior to the commencement of the inheritance is a transaction between related parties; and (c) the price paid by the ○○ Construction to acquire shares of the 1/2 shares of the ○ Construction after the commencement of the inheritance with respect to the 1/2 shares of the ○ Construction’s assets and liabilities for leasing business from the 1/2 shares of the decedent Nonparty 2 prior to the commencement of the inheritance can not be deemed as an objective exchange price freely formed between many and unspecified persons; and

C. Examining the reasoning of the judgment below in light of the aforementioned provisions and legal principles, such judgment of the court below is just, and there is no error in the misapprehension of the legal principles as to transaction example included in the market price.

2. Regarding ground of appeal No. 2

A. As to the inheritance deduction of financial property, Article 22(1) of the Inheritance Tax and Gift Tax Act provides that, if there is a value calculated by deducting financial obligations from the value of the financial property from the value of the inherited property as of the date the inheritance commences (hereinafter “value of the net financial property”), a certain amount shall be deducted from the taxable value of the inherited property within the limit of KRW 20

Meanwhile, when one member of a partnership dies in a partnership that is a partnership under the Civil Act, the relationship between the partnership is naturally withdrawn from the partnership under Article 717 of the Civil Act, and the status of the deceased member is not succeeded unless there is any special agreement. Thus, the property belonging to the partnership, which is the property of the partnership, shall belong to the partnership's joint ownership where there are not less than two remaining members, and where there are only one remaining member, the remaining member shall belong to the sole ownership of the remaining member (see Supreme Court Decision 93Da3925, Feb. 25, 1994, etc.). Barring special circumstances, the heir shall not be deemed to have any right to claim a refund of the amount of money equivalent to the shares of the deceased, among the property appraised based on the active property of the partnership at the time of commencing the inheritance and the property status reflecting the negative property of the deceased at the time of commencing the inheritance (see Supreme Court Decision 2004Da49693, 4979, Mar. 9, 2006).

B. Based on the adopted evidence, the lower court acknowledged the facts as indicated in its reasoning, and determined that the instant disposition was unlawful on a different premise, on the ground that the Defendant’s debt incurred from the National Bank of Korea, while operating “△△ Development,” which was an association established by Nonparty 1, along with ○○ Construction, for the purpose of real estate leasing business, was not a financial debt that should be deducted in calculating the value of the net financial property from the inheritance deduction of the financial property, and was not a financial debt that should be deducted in calculating the value of the

C. Examining the reasoning of the lower judgment in light of the aforementioned provisions and legal principles, the lower court’s determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on inheritance deduction

3. Conclusion

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.

Justices Kim Chang-suk (Presiding Justice)