Cho High Court Decision 201Do2754 ( December 27, 2011)

Since the debt has not been deducted, it shall be deemed that the gift profit has been earned.

Since the bonds were appropriated as one's own debt, and the bonds were received after deducting them, and the liabilities were not deducted in proportion to their own shares, it is inevitable to regard the gift profits equivalent to the same amount as having accrued.

2012 disposition of revocation of imposition of gift tax

Park XX

Head of the District Tax Office

July 27, 2012

August 24, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of gift tax of KRW 000 against the Plaintiff on July 1, 201 shall be revoked.

1. Details of the disposition;

A. On November 9, 1990, the plaintiff, who is the spouse of KimA, was registered as the business operator on September 1, 2008 that "the plaintiff, who is the spouse of KimA, operates a real estate rental business."

B. On October 22, 2009, the Plaintiff and KimA appraised each land and building (hereinafter referred to as “the instant real estate”) from the Korea Appraisal Board as indicated in Table 1, and made an investment in kind in the company XX (hereinafter referred to as “non-party company”) on December 14, 2009.

C. On February 26, 2010, the Plaintiff and KimA applied to the Defendant for the taxation carried forward of transfer income tax as indicated in Table 2 below with the lease deposit amount of KRW 000 on the instant real estate (hereinafter “instant deposit”) as the Defendant’s debt of KimA.

D. On July 1, 2011, the Defendant imposed KRW 000 of the gift tax on the Plaintiff on the ground that “the shares acquired in excess of the amount invested in kind was donated from the non-party company” (hereinafter “instant disposition”). On the same day, the Defendant imposed KRW 000 of the transfer income tax on KimA on the same day on the ground that “the shares acquired in excess of the amount invested in kind were acquired in kind,” as indicated in Table 2, in proportion to the shares of the Plaintiff and KimA regarding the instant real estate.”

E. The Plaintiff filed an appeal on July 29, 201, but was dismissed by the Tax Tribunal on December 27, 2011.

[Reasons for Recognition] Class A, Nos. 1, 3, 4 (including paper numbers), and Category B 3 and 4

Table 1: Details and assessment details of the investment-in-kind real estate

(The following table omitted):

(2) Evaluation of the value of the investment in kind

(The following table omitted):

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Since KimA bears the full amount of the obligation to return the instant deposit, the instant disposition that differs from this premise is unlawful.

(2) Even if the amount equivalent to the Plaintiff’s share ratio (00 won) out of the instant security deposit is the entire amount of the instant security deposit, KimA’s receipt of the instant security deposit, and the Plaintiff can be deemed to have held a refund claim against KimA and invested in kind. Therefore, if the Plaintiff’s debt and the claim are offset against the Plaintiff’s debt, the disposition of this case is unlawful.

(3) Even if the Plaintiff received a gift of KRW 000,00, the donor is KimA, and in this case, the donor is required to obtain a spouse deduction (000 won). In calculating this, there is no gift benefit, and thus, the instant disposition is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) As to the assertion of the obligation to refund the instant deposit

According to the above lease agreement, KimA has entered into a lease agreement with the Plaintiff during the lease period from September 1, 2008 to August 31, 201, and from August 31, 201, the amount equivalent to the Plaintiff’s share in the real estate between KimA and KimA has been determined as KRW 00 (including value added tax) during the lease period. The Plaintiff received a rent from KimA in accordance with the above lease agreement and issued a tax invoice to KimA as a rental service supplier, and paid the value-added tax and comprehensive income tax on the rent. According to the Plaintiff and KimA’s business registration, it is recognized that the Plaintiff and KimA jointly purchased the real estate of this case from among the real estate of this case, and that the Plaintiff jointly purchased the real estate of this case, and that the Plaintiff and KimA signed a contract for appraisal and assessment of the real estate of this case with the Plaintiff, and that the Plaintiff jointly purchased the real estate of this case with the Plaintiff, as the real estate of this case.

As above, even if KimA received, distributed, and managed rents from lessees, as long as the Plaintiff entered into a lease agreement with the lessee as lessor, legal lessees can seek the return of the instant deposit against the Plaintiff, so long as KimA entered into a lease agreement with the lessee, barring any special circumstance, the lease is not a lease of each own share, but a lease of the object of lease is jointly leased as a large number of parties, and the obligation to return the deposit is an indivisible obligation (see Supreme Court Decision 98Da43137, Dec. 8, 1998). Therefore, it is reasonable to view the Plaintiff’s portion corresponding to the Plaintiff’s share as the Plaintiff’s business liability. Therefore, the Plaintiff’s above assertion is without merit.

(2) As to the claim for offset

Inasmuch as KimA received the shares obtained by including the instant deposit as one’s own debt, and the Plaintiff did not deduct the debt corresponding to its own share ratio, it is bound to take advantage of the donation profit equivalent to the same amount. Unlike the Plaintiff’s assertion, the Plaintiff did not include the Plaintiff’s claim against KimA in the Plaintiff’s investment in kind even if there is a refund claim equivalent to the Plaintiff’s share ratio among the instant deposit money, and the refund of the deposit is merely a settlement made between the Plaintiff and KimA, it cannot be viewed as an investment in kind, and thus, it cannot be viewed as an object of set-off. Accordingly, the Plaintiff’

(3) As to the assertion of donor

Since the non-party company suffered profit from the plaintiff's donation by excessively assessing the amount of the plaintiff's investment in kind, the plaintiff's assertion that KimA was the donor is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.