The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. As to the ground of appeal No. 1, Article 40(1) of the Corporate Tax Act provides, “The fiscal year of accrual of earnings and losses of a domestic corporation for each fiscal year shall be the fiscal year which includes the date on which the concerned earnings and losses are settled.” According to delegation under Article 40(2) of the Corporate Tax Act, the main text of Article 68(1)3 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 23589, Feb. 2, 2012) provides, “the fiscal year of accrual of losses incurred from the transfer of assets other than goods, etc.” refers to the fiscal

As such, the Corporate Tax Act adopts the principle of confirmation of rights and obligations that the profits and losses are to be realized at the time of establishing the rights and obligations to clarify the time when profits and losses accrue.

This is to promote legal stability and fair taxation by uniformly identifying taxable income of taxpayers and at the same time to exclude taxpayers from taxation.

(See Supreme Court Decision 2016Du51511 Decided March 22, 2017). Based on its stated reasoning, the lower court determined that the Plaintiff’s loss should be included in deductible expenses for the business year to which the time of the sale belongs, deeming that the amount calculated by subtracting the sale price from the acquisition price of the ELW taken over from the issuer by selling the ESW (hereinafter referred to as “ELW”) to investors was realized and finalized.

Examining the records in accordance with the above legal principles, the above judgment of the court below is justifiable.

There is no error of misapprehending the legal principles regarding the period of attribution of profits and losses under the Corporate Tax Act.

2. As to the ground of appeal No. 2, Article 14 of the Framework Act on National Taxes (1) applies to the calculation of tax base pursuant to the substance of an act or transaction, regardless of the name or form of the act or transaction (Paragraph 2), and aims to unfairly benefit from the tax law by either indirect method via a third party or two or more acts or transactions.