The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Article 40(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 1357, Dec. 15, 2015; hereinafter “former Inheritance Tax Act”) provides, “In cases where any of the following profits is acquired by converting into or exchanging stocks with convertible bonds, bonds with warrant (referring to warrant certificates where preemptive rights are separated) or other stocks, or by transferring or exchanging stocks with bonds entitled to take over stocks (hereinafter “convertible bonds, etc.”) or accepting stocks with rights to take over stocks, an amount equivalent to such profits shall be deemed the value of property donated to the person who has acquired such profits.” subparagraph 2(b) provides, “In cases where the largest shareholder of a corporation which issued convertible bonds, etc. or his/her specially related persons, who is a shareholder thereof, has acquired stocks in excess of the number entitled to receive convertible bonds, etc. under equal conditions in proportion to the number of stocks owned by the corporation and directly or indirectly acquired profits from the specially related persons under subparagraph 1 or 2 by converting them into or transferring convertible bonds, etc. or acquiring profits from such stocks”

2. In full view of the evidence adopted by the lower court, the lower court issued the instant bonds on June 30, 2008 by Company B (hereinafter “B”), and C Co., Ltd (hereinafter “C”) issued all the instant bonds on the same day.