In order to presume a gift, the tax authorities must prove that the donor has financial capacity to donate property to the donor.

For the presumption of gift, the tax authority must prove that the donee has the financial capacity to donate property to the donor in addition to the absence of certain occupation or income. In addition, in order to reverse such presumption, it is necessary to verify the source of the funds for acquiring property, separate from the funds presumed to have been donated, and to prove that the funds have been used as the funds for acquiring property in question.

Article 45 of the former Inheritance Tax and Gift Tax Act: Presumption of Donation of Property Acquisition Funds

2015Guhap60694 Revocation of Disposition of Imposition of Gift Tax

OraA

○ Head of tax office

2016.09.06

October 25, 2016

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 ○○○○ (including additional taxes) of the gift tax for the year 2008, July 19, 2013 against the plaintiff, and the imposition of ○○ (including additional taxes) of the gift tax for the year 2010, which was July 22, 2013, shall be revoked.

1. Details of the disposition;

A. The Plaintiff newly constructed ○○○-dong 1, 00,000 (excluding balcony construction costs) with a total of KRW 2,886,766,040 (excluding balcony construction costs), including land purchase costs and construction costs, as indicated in the table below (D) and completed registration of initial ownership on June 27, 2008.

B. After April 1, 2014, the head of the Namyang District Tax Office (the opening of the New Mine District Tax Office on April 1, 2014 and the establishment of the Plaintiff’s domicile was changed to Echeon Tax Office. Since then on April 1, 2014, the determination or correction of the tax base and amount of national tax against the Plaintiff is under the jurisdiction of the Defendant (Article 44 of the Framework Act on National Taxes; hereinafter referred to as “Defendant”) and the determination or correction thereof is under the jurisdiction of the Defendant. As a result of the investigation of the funding for the acquisition of the instant real estate around March 2013, the Plaintiff’s tax base should be deemed to have been donated from the her husband, and the initial tax base of KRW 1,836,766,00,00 for the instant real estate acquisition value and the construction cost of KRW 55,000 for the balcony and KRW 600 million for the spouse deduction clause, including the additional tax for the Plaintiff’s gift tax for the year 260, 360,27.48.

C. On November 4, 2014, the Tax Tribunal rendered a decision that "the defendant imposed a gift tax of KRW 576,163,620 on July 19, 2013 against the plaintiff on July 19, 2013, 637,941,640 (the sum of the issues in the table in the table in paragraph (d) below 2) (the sum of the issues in the table in paragraph (d) below) shall be excluded from the gift tax value, thereby correcting the relevant tax base and tax amount, and dismissing the remainder of the appeal."

D. According to the above decision of the Tax Tribunal, the defendant, as stated in the table of the following sub-paragraph (d) [Disposition for Correction], re-determinedd donated property as stated in the table of the following sub-paragraph (d), and determined and notified the gift tax of KRW 205,960,896 (including additional taxes) and the gift tax of KRW 25,532,100 (including additional taxes) for the year 2010 (hereinafter referred to as "disposition for imposition of the gift tax of this case") (hereinafter referred to as "disposition for imposition of the gift tax of this case").

[Ground of recognition] Facts without dispute, Gap evidence 2, 3, 4, 5, Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) In the case of u300 points ① amount, the Plaintiff purchased Y 10,000 shares out of the above income from 1983 to 199, and sold Y 10,000 shares of Y Y Y Y 10,000 shares (hereinafter referred to as “instant shares”) on November 20, 200, the Plaintiff received 203,923,447 won and 94,656,560 won and 298,560 won of retirement pay from February 199. The Plaintiff paid 5,58,580,000 shares to Y Y Y Y 10,000 shares (hereinafter referred to as “instant shares”) from 1983 to PP and lent it to her husband CC on behalf of the Plaintiff 28, 2005.

2) In the case of the issue third amount, the plaintiff received from the president of the R Group OW, which was put by the plaintiff at the time of marriage in 1984, i.e., 2 points from the president of the R group, i.e., the "K's people," and 1959 "HaJ" (hereinafter referred to as the "NJ"), and held them, and around June 2008, sold the key picture to 1.3 billion won through BB around June 25, 2008, and received the KRW 70 million on June 25, 2008 and the KRW 600 million on September 11, 2008, and paid the amount of the issue third amount with the funds of the plaintiff on September 11, 2008.

3) In the case of No.44 amount, there is no basis to deem that the Plaintiff was given a gift to ChoCC by taking into account the sales proceeds of the shares and key pictures at issue.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Relevant legal principles

Article 45(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 13557, Dec. 15, 2015; hereinafter referred to as the "former Inheritance Tax and Gift Tax Act") provides that "in cases where it is difficult to recognize that a person acquired a property with his/her own ability in view of the occupation, age, income, property condition, etc., as prescribed by Presidential Decree, the funds for acquiring the property shall be presumed to have been donated to the person who acquired the property and shall be deemed to be the value of donated property to the person who acquired the property," and Paragraph (1) and Paragraph (2) of the same Article provides that "in cases where the funds for acquisition or repayment are less than the amount prescribed by Presidential Decree in consideration of occupation, age, income, property condition, etc., and where sufficient vindication of the source of funds for acquisition or repayment, paragraphs (1) and (2) shall not apply. In addition, Article 34(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 2042, Feb. 18, 2018) provides that the value of the property reported or donations (hereinafter referred to be returned).

The fact of donation of property, which is a requirement for the imposition of gift tax, is, in principle, proved by the tax authority. If the tax authority establishes a certain occupation at the time of acquisition of the property, and there is a person who actually had considerable income from the acquisition of the property, barring special circumstances, the portion of the fund required for the acquisition of the property cannot be deemed as having been donated to another person, unless there is any special circumstance. However, if a person without a certain occupation or income does not have any funds sufficient to clearly present the source of the fund required for the acquisition of the property, and his/her lineal ascendant or spouse, etc. has any financial ability to obtain a donation, it shall be reasonable to presume that the fund for the acquisition was donated from the person with financial capacity (see, e.g., Supreme Court Decision 96Nu7205, Apr. 8, 1997). In order to estimate the donation, the tax authority must prove that the donee had any financial capacity sufficient to obtain a donation of property to the donor, such as the acquisition of the property (see, e.g., Supreme Court Decision 2008Du1984, supra).

In addition, barring special circumstances, such as where a tax authority received a written confirmation from a taxpayer that a certain part of a transaction is a processing transaction during the course of a tax investigation, such written confirmation cannot be readily denied solely based on the evidence of the written confirmation, barring any such circumstance as where it is difficult to take the written confirmation as evidence of the specific fact due to a lack of details or any other reason (see, e.g., Supreme Court Decision 2001Du2560, Dec. 6, 2002).

2) In the instant case:

According to Gap evidence No. 1 and Eul evidence No. 8 and No. 9, the plaintiff received 210,692,523 won's salary and retirement allowance of 94,656,560 won in total while working for LLLW high schools, etc. from 1983 to 1999. The plaintiff's husband, as the president of MM group's strategic department, 2,940,680,920 won in 205,079,828,504 won in 2006, 3,0079,828,504, 496 won in 207, and 4,67,83,212 won in total, and 90 won in 2,50 won in 2,000 won in 2,000 won in 20,000 won in 2,000 won in 2,50 won in 2,000 won in excluding the acquisition value of property in this case.

A) Determination on issues (i) amount

① The Plaintiff’s assertion that the Plaintiff purchased 250,000,000 won of 17 years of his/her retirement without using all the income earned from his/her school life is difficult to believe this in light of the empirical rule, and there is no evidence suggesting that the Plaintiff acquired 17 years of 17 years of 250,000 of her income.

② According to the statement in Eul evidence No. 2, on November 20, 2002, 547,250,000 won was deposited from the PP PP PP P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P. On November 22, 2002, 540,00 won was deposited in the Plaintiff’s property or deposited into another Plaintiff’s account. On December 6, 2002, 50,000 won was withdrawn and deposited in another Plaintiff’s name on the same day on the same date. However, it is difficult to readily conclude that the above amount was paid with the Plaintiff’s property or 510,056,511 won as financial resources.

③ Furthermore, according to the purport of the Plaintiff’s evidence No. 3 and the entire pleadings, the Plaintiff’s husband, served for a long time as the president in charge of strategic affairs of the MM group, and the PP PP PCC, a disguised affiliated company of the MM group, takes charge of the acquisition, merger, purchase, sale, etc. of major assets, and takes charge of the overall management of the above affiliate companies, including the PP factoring, and it is acknowledged that the above judgment became final and conclusive upon conviction of the above affiliate companies due to the suspicion of embezzlement, breach of trust, etc. of PP factoring, and in light of the above facts, it is highly doubtful that the PPCC is not a transaction of outstanding stocks by lending the Plaintiff’s account, etc. under the Plaintiff’s name.

④ On January 28, 2005, ParkS paid KRW 800 million as down payment of the instant real estate site, there is no dispute between the parties. According to the evidence No. 4, ParkS was subject to a tax investigation related to the instant real estate case and “PS paid the said money, according to its monetary relationship with the MediationCC, it was said that it would be at issue of gift tax due to the Plaintiff’s occupational negligence and the lack of income, and that it was submitted to the Defendant by preparing a written confirmation to the effect that “PS did not have any monetary loan transaction between itself and OS,” and that the said statement in ParkS would be reliable in conformity with the content of the written confirmation prepared by the Plaintiff subject to the instant tax investigation.

B) Judgment on the issue third amount

① Although the testimony of Gap, 6, 9, and 17 as well as witness KimF, which corresponds to the Plaintiff’s assertion that key pictures were owned by the Plaintiff, the above evidence cannot be believed as it is in light of the following circumstances, or it is insufficient to recognize the Plaintiff’s assertion solely based on the above evidence.

② Although the Plaintiff asserted that he was donated the key picture from his own attached document, there is no objective evidence to acknowledge the Plaintiff’s acquisition of the key picture, that is, the Plaintiff’s report and payment of acquisition tax or gift tax on the key picture of W and the Plaintiff’s key picture.

③ According to the evidence No. 6, it is also acknowledged that BB deposited KRW 700 million in the Plaintiff’s account under the Plaintiff’s name on June 25, 2008, and KRW 600 million on September 5, 2008. Meanwhile, according to the evidence No. 5, it is also recognized that the 1959 EiJ out of the key forests was awarded a successful bid of KRW 1.6 billion in the auction of the best art works in progress on June 18, 2008. The facts acknowledged earlier alone are difficult to readily conclude that the amount deposited in the Plaintiff’s account is the sales proceeds of the key forest.

④ Each entry in the evidence Nos. 9 and 17 also corresponds to the fact that the Plaintiff’s account in the Plaintiff’s name was deposited on June 25, 2008, and on September 5, 2008, from BB recognized by the entry in the evidence No. 6, and there are insufficient materials to acknowledge that the said deposit amount was the sale price of the key forest or that the key forest was the Plaintiff’s ownership.

⑤ Rather, according to the evidence evidence No. 7, among the above Plaintiff’s account (Evidence No. 6) from 2007 to 2011, 2,589,828,487 won, credit card payment amount of KRW 1,349,310,714, and NN amount of KRW 740,000,00 can be verified. In light of such fact, it is difficult to believe that the above Plaintiff’s account was managed and used by the Plaintiff’s individual.

6. Moreover, there is no evidence suggesting that the 1.3 billion won in total was paid from the above Plaintiff’s account opened in the Plaintiff’s name.

7) Meanwhile, according to the evidence Nos. 8 and 6 evidence Nos. 8 and 6, the Red Z, the representative director of BB, is recognized as having stated that “The Red Z purchased the key picture from ChoCC and sold it to HongV” in the process of prosecutorial investigation of the criminal case against ChoCC.

C) Determination of No.4

① The Plaintiff asserted that the Tax Tribunal borrowed KRW 630,000,000 from ChoCC on the No.4 amount of issue at issue at the time of a request for a judgment. The Plaintiff paid KRW 6300,000 on June 4, 2009 to the effect that the difference in excess was repaid KRW 60,000,000,000. However, in the instant lawsuit, the Plaintiff did not make any other argument except that the sales proceeds, etc. of outstanding shares and key pictures should be taken into account in regard to the amount of issue at issue at the time of the instant lawsuit, and there is no reasonable reason to understand the modification of the contents of the vindication

② Furthermore, the Plaintiff was subject to the instant tax investigation and submitted to the Defendant a confirmation that it received the No.D. amount at issue from the MediationCC.

3. Conclusion

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