The business year of bad debts

Comprehensively taking account of Article 9(1) and (3), Article 17(1) of the Corporate Tax Act, Article 12(2)8 of the Enforcement Decree of the same Act, and Article 9(2) of the Enforcement Decree of the same Act, the types of bad debt can be classified into cases where corresponding claims are legally extinguished and cases where legally extinguished, but the existence or absence of assets is not recoverable in light of the debtor's property status and payment ability, etc., and the former is naturally impossible. Therefore, the former is included in deductible expenses for the business year in which the date when the corporation becomes unable to recover is extinguished as bad debt, and the latter is included in deductible expenses for the business year in which the date when the corporation is extinguished as bad debt. Since there is a creditor, the creditor can be included in deductible expenses for the pertinent business year only when the corporation processes accounts in which it is clearly impossible to recover and caused bad debt.

Article 9(1) and (3) of the Corporate Tax Act, Article 17(1) of the Corporate Tax Act, Article 12(2)8 and Article 21 of the Enforcement Decree of the same Act, Article 9(2) of the Enforcement Decree of the same Act

Supreme Court Decision 87Nu465 Decided September 27, 1988

Samsung Publishing Co., Ltd., Ltd., Counsel for defendant-appellee

Head of the tax office;

Seoul High Court Decision 88Gu11010 decided Feb. 15, 1989

The appeal is dismissed.

The costs of appeal shall be borne by the defendant.

As to the Grounds of Appeal:

The court below's finding that the plaintiff borrowed the funds from the non-party who is the representative director and paid the land price in this case to the non-party company. It cannot be viewed that there was an error of law such as the theory of litigation or violation of the rules of evidence selection in the process of determining the evidence preparation.

In addition, considering the various provisions of Article 9(1) and (3) of the Corporate Tax Act, Article 12(2)8 of the Enforcement Decree of the same Act, Article 21 subparag. 1 through 3 of the same Act, Article 9(2) of the Enforcement Decree of the same Act, and Article 17(1) of the same Act, the form of bad debt can be divided into cases where corresponding claims are legally extinguished and cases where the corresponding claims are legally extinguished, but the debtor's assets status and ability to pay are not recovered. The former is naturally impossible to recover, and the former is included in deductible expenses for the business year to which the date when the former ceases to dispose of the bad debt belongs, and the latter is the creditor's body. Thus, it is reasonable to view that it can be included in deductible expenses for the business year to which the date when the corporation becomes unable to recover, and that it can be viewed that it can be included in deductible expenses for the tax year on account of the tax account only when the corporation becomes unable to recover (settlement settlement adjustment, so-called settlement adjustment).

Therefore, this appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-ju (Presiding Justice)