Whether the instant disposition constitutes subject to gift taxation

The loan debt of this case cannot be deemed as a debt secured by the Plaintiff’s share in the building of this case, and the amount already deducted from the value of donated property cannot be deducted again from the value of donated property.

Article 47 of the Inheritance Tax and Gift Tax Act

revocation of revocation of imposition of gift tax by Suwon District Court 2018Guhap44

OO

O Head of tax office

December 06, 2018

December 20, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of gift tax of KRW 255,98,241 against the Plaintiff on October 5, 2016 shall be revoked.

1. Details of the disposition;

A. On March 5, 1974, the Plaintiff’s father Aa (the deceased on May 2, 2015, hereinafter “the deceased”) acquired 1/2 shares of Geumcheon-gu Ggdong 293-20 larger than 606.3 square meters (hereinafter “instant land”) and acquired 1/2 shares of the remainder of the instant land on July 25, 1978.

B. On July 23, 2012, a building of Class 1 and Class 2 neighborhood living facilities on the ground of the instant land (hereinafter referred to as “instant building”) was newly constructed, and the registration of ownership was completed on July 23, 2012 by the Plaintiff, the Deceased, and the sss (the Plaintiff’s shapes) as co-owners of each share of 1/3.

C. Following the deceased’s death on September 2, 2016, due to inheritance due to the division between May 2, 2015 and May 2, 2015, 1/3 of the deceased’s share in the instant building was completed in the name of fff (the deceased’s spouse), and 1/3 of each share in the instant land was completed in the name of fff, the Plaintiff, and Ss.

D. From April 26, 2016 to July 26, 2016, a regional regional tax office conducted an inheritance tax investigation on the Deceased. The deceased donated KRW 2,650,077,220 won to the Plaintiff, and donated KRW 883,333,333 of the newly constructed construction cost of the instant building to the Plaintiff, while the Plaintiff donated cash of KRW 30,000,000 on March 6, 2013, and notified the Defendant of such investigation results. The Defendant, on October 5, 2016, announced the Plaintiff of the gift tax of KRW 319,519,197 and the gift tax of KRW 14,015,70 as of March 6, 2013, respectively.

E. On July 3, 2017, the Plaintiff filed an objection and filed a request for review on KRW 14,015,700 of the gift tax on March 6, 2013. On September 28, 2017, the Commissioner of the National Tax Service rendered a decision to deduct the tax base and tax amount from the taxable value of the gift tax on the proportion that the value of 1/3 of the share in the building among the total sum of the deposit for the first floor and the deposit for the third floor lease of the building in this case (hereinafter referred to as “lease deposit”) constituted KRW 84,40,000,000,000 (hereinafter referred to as “the lease deposit in this case”) constituted a debt secured by the gift tax in this case and the total sum of the value of the land and the building in this case, and determined to accept the said claim by the Plaintiff.

F. On September 2018, according to the above decision of partial acceptance by the Commissioner of the National Tax Service, the Defendant rendered a decision of partial reduction of the gift tax imposed on the Plaintiff on July 18, 2012 as KRW 255,998,241 (including additional tax) (hereinafter “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 5, 12, 13, Eul evidence Nos. 1, 6, and 7, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

1) The primary argument

The building of this case was newly constructed by a Dong enterprise consisting of the Plaintiff as a bank loan, and the Plaintiff acquired the name of the building of this case equivalent to its share pursuant to the business agreement, and did not receive a donation from the deceased. Thus, the share of the building of this case is not subject to gift tax.

2) Preliminary assertion

Even if the gift tax is imposed on the Plaintiff’s share of the instant building, one-third of the loan obligations that the Plaintiff continues to pay and the lease deposit obligations of this case is substantially secured by the Plaintiff’s share of the instant building, and thus, the taxable value of the gift tax should be calculated by deducting the same.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) On January 5, 201, the Deceased and Ss entered into a partnership agreement with each share of 60% and 40% as a joint proprietor of a real estate rental business, and on April 11, 2011, the deceased and Ss issued a registration certificate for a non-residential building rental business operator on the trade name, “durur with the instant land as a joint proprietor of a business place”.

2) On April 20, 201, the construction period between the Deceased, the Plaintiff, and the S, as a joint project owner, was set up between April 20, 201 and May 30, 2012, with respect to the instant building, a standard contract for construction contract of KRW 2,791,514,00 with respect to the construction work of the instant building. The Deceased, the Plaintiff, and the S were issued a business registration certificate with the content of adding the Plaintiff to the joint business proprietor of the said dddiel on the same day.

3) On March 30, 2005, Hh Bank Co., Ltd. (hereinafter “hh Bank”) completed the registration of establishment of a new mortgage over the land of this case on the first priority basis of the maximum debt amount of KRW 450 million with respect to the old building destroyed due to the new construction of the building of this case as joint collateral.

4) On April 27, 2011, and September 9, 2011, the Deceased obtained a loan for general corporate facilities (hereinafter “instant loan”) from the HH Bank, and HH Bank completed the registration of establishment of a mortgage over the instant land with the second priority of the maximum debt amount of KRW 785 million on April 27, 201, and the third priority of the maximum debt amount of KRW 1.365 million on September 9, 201, respectively.

5) On July 23, 2012, the Deceased, the Plaintiff, sss, and h Bank entered into an additional mortgage agreement with the content that added 1/3 of the shares of the Plaintiff and ss in the instant building to the instant loan obligations as joint collateral. On the same day, HH Bank added the instant building as joint collateral in accordance with the above agreement, etc.

6) On December 28, 201, the Deceased entered into a lease contract with the Seoul Saemaul Savings Depository and the first01 of the instant building for a five-year period from July 18, 2012 to July 18, 2017. On June 22, 2012, jjj and the third floor of the instant building, the lease deposit amount of KRW 280,000,000,00,000,000 from July 2, 201 to July 1, 2017, and the Plaintiff entered into a lease contract with the five-year period from July 1, 201, and the five-year period from July 2, 201 to July 1, 201, the term of the lease contract was 60,000,000,000,000,000,000,000,000,000,00.

7) From April 27, 2011, the Deceased paid monthly interest on the instant loan obligation at HH Bank Ggdong Branch, and as of May 2, 2015, the amount of the instant loan obligation is KRW 869,800,000, and KRW 1,050,000,000 based on the record of the Debt Certification Board.

8) Upon the deceased’s death on May 2, 2015, the deceased’s heir, the deceased’s heir, the Plaintiff, and S indicated KRW 5,452,9,545 as the inherited property on November 30, 2015, KRW 2,914,464,260 as the debt and funeral expenses, KRW 151,70 as the value of donated property added to the value of inherited property, KRW 2,680,228,285 as the taxable value of inherited property, and KRW 318,05,789 as the tax payable, and KRW 1,919,80,000 as the total amount of the loan debt of this case and KRW 41,220,00 as the total amount of the debt of the deceased’s Saemaul Fund of KRW 1,919,80,00 as the debt of the deceased’s Saemaul Fund of KRW 20,00 as the debt of the deceased’s heir.

9) On October 31, 2016, the name of the debtor in the name of hH bank on the instant land and building was registered as ss respectively on the ground of the acquisition of the contract.

[Reasons for Recognition] The facts without dispute, Gap evidence Nos. 1 through 7, Eul evidence Nos. 3, 6, and 7 (including each number), the purport of the whole pleadings

D. Determination

1) We examine the judgment on the primary argument of the deceased, and the fact that the plaintiff was registered as joint business operators of DD with the deceased and s as seen above. However, the following circumstances acknowledged as follows: ① the plaintiff is a deceased's son; ② the agreement between the plaintiff and s is merely the son's son; ② the agreement between the above son and hh Bank was entered only the son's son's son's son; ② the contents of the joint business as well as the way to distribute the son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's son's.

2) As to whether the Plaintiff actually acquired the instant loan obligation from the ancillary claim, the following circumstances acknowledged based on the facts and purport of the entire pleadings, namely, ① the nominal owner of the instant loan still remains in the name of the Deceased until the commencing date of the inheritance. On the other hand, there was no fact that the Plaintiff assumed the said loan obligation. ② Although the Plaintiff entered into an additional mortgage agreement with HH Bank on July 23, 2012 with respect to the instant loan obligation, the Plaintiff’s failure to perform the instant loan obligation would have been verified to exercise the security right to the Plaintiff’s ownership of the instant real estate or the deceased’s insolvent (the deceased owned an apartment house equivalent to KRW 450 million with the value of the instant property secured by the appraisal of KRW 6 billion as well as the value of the instant property guaranteed by the deceased’s gift tax, the Plaintiff’s claim that the amount of the instant loan obligation should be deducted from the value of the instant property transferred to HH Bank based on the inheritance deposit and the value of the instant property transferred to the Plaintiff’s owner as well as the value of the instant property transferred.

3. Conclusion

Thus, the plaintiff's claim of this case is dismissed as it is without merit.