Whether the instant real estate was title trust, etc.

In the event of title trust of real estate to a third party, if the title truster transfers the real estate to the third party and the income accrued from such transfer was reverted to the title truster, the taxpayer of the relevant capital gains tax under the substance over form principle is not the title truster who is the subject of the transfer, but the title trustee

Article 14 of the Framework Act on National Taxes

2014Gudan30392 Revocation of Disposition of Imposing capital gains tax

GuAA

The superintendent of the tax office

July 11, 2014

October 10, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of ○○○○○ (hereinafter “instant disposition”) of capital gains tax for the year 201, which the Plaintiff rendered on July 1, 2013, shall be revoked.

1. Details of the disposition;

A. On January 14, 2003, the Plaintiff acquired the registration of ownership transfer in the Plaintiff’s name after being awarded a bid for each of the same 124-3 shares and 1/2 shares in ParkA and 124-3 shares in the same O-dong O-dong 131 m261m2, and 132-4 m2,16m2 (hereinafter “each of the above real estate”) and the same 124-3m20m2 in the same O-dong O-dong O-dong 131m2.

B. On February 22, 2006, the registration of ownership transfer was completed in the name of thisA, and on November 4, 201, the instant real estate was sold by voluntary auction to KimO, etc.

C. On July 1, 2013, the Defendant conducted an investigation of capital gains tax on the Plaintiff, and completed the registration of ownership transfer under the name of thisA with respect to the instant real estate constitutes a title trust. As such, the Defendant determined and notified the Plaintiff as to 1/2 of the Plaintiff’s equity interest out of the gains accruing from the sale of the instant real estate through voluntary auction, as to the Plaintiff’s capital gains tax for the year 201.

D. The Plaintiff filed a request for review with respect to the foregoing disposition, but received a decision to dismiss such request on December 18, 2013.

Facts that there is no dispute over recognition, Gap's 1, 2, Eul's 1, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) With respect to the instant real estate, the registration of ownership transfer in the name of thisA was completed, and the registration of ownership transfer was completed in another place, and the instant real estate was awarded to a voluntary auction procedure based on the right to collateral security, and thus, is owned by thisA. In addition, the Plaintiff voluntarily withdrawn the instant real estate at the appellate court, even though the first instance court rendered a favorable judgment against thisA by filing a lawsuit for ownership transfer. Since the Plaintiff cannot dispute any longer legally, the ownership of the instant real estate was finally reverted to thisA. Accordingly, the Defendant’s disposition based on the premise that the Plaintiff trusted the instant real estate to thisA was a title trust is unlawful.

2) There is no money reverted to the Plaintiff among the OO members received as down payment and intermediate payment pursuant to the sales contract with the Z Development Co., Ltd. (hereinafter referred to as the “ZZ Development”), and there is no right to the successful bid price. Accordingly, the Defendant’s disposition based on the premise that the Plaintiff is entitled to the benefit from the transfer through the voluntary auction procedure is unlawful.

3) Even if the instant real estate in household is owned by the Plaintiff and ParkA, and is held in title by thisA, capital gains tax shall be imposed only on the Plaintiff with only 1/2 equity interest in the instant real estate, and when the Plaintiff completes the registration of ownership transfer to thisA, capital gains tax shall be imposed only on the Plaintiff with only 1/2 equity interest in the instant real estate. The Plaintiff paid capital gains tax of KRW 13,162,910 to the Plaintiff. This portion should be illegally

B. Relevant statutes

[Framework Act on National Taxes]

Article 14 (Real Taxation)

(1) If the ownership of income, profit, property, act or transaction subject to taxation is merely nominal, and a third person to whom such ownership belongs exists, tax-related Acts shall apply to such person to whom such person actually belongs as a taxpayer.

(2) The provisions pertaining to the calculation of tax base in tax-related Acts shall apply to the actual income, profit, property, act or transaction, regardless of its title or form.

(c) Fact of recognition;

1) In the process of compulsory auction on January 10, 2003, in which the Plaintiff was awarded a bid for the instant real estate and the land of 820 square meters prior to 124-3 of the same Act, Park Jong-A intended to purchase 1/2 shares among them. Since only the Plaintiff was eligible to acquire farmland, only the Plaintiff was bid under the Plaintiff’s sole name and completed the registration of ownership transfer by winning the bid in the name of the Plaintiff.

2) On February 9, 2004, ParkA thought that the instant real estate and the instant real estate were acquired ownership of 1/20 square meters prior to 124-3, 820 square meters, and that on February 9, 2004, ParkA sold its own shares to the head of the Gu, who is the spouse of the OA, to the OOO (However, the seller’s name was the Plaintiff as the nominal owner) and received the OOO KRW 1/2 of the total amount as the down payment and the intermediate payment from the head of the Gu, and the remainder was agreed to be paid by the head of the Gu when selling the said shares to a third party.

3) As a container for export was stored on the instant real estate, among the instant real estate and the instant real estate, which falls under farmland between 124-3 and 820 square meters, the Plaintiff was not able to hold a farmer’s residence in the instant real estate. Of that, the Plaintiff was notified on February 10, 2006 by the head of Suwon District Office that if the instant real estate constitutes farmland subject to disposal and did not dispose of it, the enforcement fine equivalent to 20% of the officially announced value should be imposed every year until the disposition is made.

4) Accordingly, on February 16, 2006, the Plaintiff entered with ParkA and entered into a sales contract for the instant land as an OOO(OOO of contract deposit) with the person who was a driver of an attorney-at-law office working for ParkA on February 16, 2006, and completed the registration of ownership transfer on February 22, 2006.

5) On February 22, 2006, the Plaintiff completed the registration of ownership transfer under the name of the Defendant with respect to the instant real estate, and completed the registration of creation of a collateral security with the Plaintiff, the debtor, the maximum debt amount of KRW 500 million.

6) On February 16, 2006, in order to create the financial data on the details of payment of the OOO Won, which is the down payment under the above sales contract, LA borrowed OOOO Won from the TO and transferred it to the account of EO immediately from the TO. This day deposited the amount equivalent to the above down payment in the Plaintiff’s account. On February 22, 2006, OOO was used as the registration fee. After receiving the down payment, the Plaintiff deposited OOO won under the name of EOO on February 21, 2006 at the request of EOA, and deposited it into the account under the name of EO designated by EO on February 22, 2006, and each of the OO KRW 36,03,06,000,000 from the account under the name of EO was deposited into the account under the name of EO. 36,006,00 won.

7) Meanwhile, during the period from March 27, 2006 to February 5, 2008, thisA remitted the total amount of KRW 11 times as interest on the secured debt (OOO) established on January 21, 2003, which was established on the instant real estate, to the Plaintiff, as the mortgagee, Suwon District Livestock Cooperatives, the debtor, the maximum debt amount, and the maximum debt amount (OOOOO) that was agreed to acquire from the Plaintiff during the period from March 27, 2006 to February 5, 2008.

8) On March 2, 2006, thisA entered into a sales contract with respect to the instant real estate as the purchase price for the ZZ development, and received the OCO from the Z development while concluding the sales contract.

9) On the other hand, on May 18, 2006, ParkA terminated the agreement on the above sales contract with the head of the Gu, and on September 30, 2006, between the head of the Gu and the defendant jointly and severally agreed to pay the head of the Gu to the head of the Gu to the head of the Gu for the return, etc. of the sales price OOOO members already received from the head of the Gu by September 30, 2006. The head of the Gu signed this agreement as a joint and several surety for the above debt of the head of the Gu.

In addition, this AA entered into a mortgage agreement with OOOO, obligee, and obligor A with respect to the instant real estate as collateral for the said debt on the same day, and OA completed the registration of establishment of a mortgage on the instant real estate on July 10, 2008.

10) With respect to the instant real estate on October 21, 2008, thisA completed the establishment registration of the mortgage near the debtor ParkA, the mortgagee XX Construction Co., Ltd., the maximum debt amount, and the maximum debt amount OOO.

11) The registration certificate in the name of thisA concerning the instant real estate is kept by the Plaintiff.

12) On the premise that the sales contract between the Plaintiff and thisA is title trust, the Plaintiff filed a lawsuit (U.S. District Court 2009Gahap6663) seeking implementation of the procedure for cancellation of ownership transfer registration of the instant real estate on the premise that it is a title trust, and won the entire lawsuit on May 7, 2010. However, on November 4, 2010, the Plaintiff withdrawn the said lawsuit in the appellate court (Seoul High Court 2010Na5009).

13) On July 19, 2010, the Z development paid the Plaintiff the KRW OO of the secured debt of the registration of the establishment of a mortgage around February 22, 2006, and cancelled the registration of the establishment of a mortgage over the above area. On October 7, 2010, the Plaintiff paid the Plaintiff the secured debt of the registration of the establishment of a mortgage on January 21, 2003, which was the debtor, to the Plaintiff on behalf of the Plaintiff, and then cancelled the registration of the establishment of a mortgage over the above area.

Facts that there is no dispute for recognition, Gap's statement of Gap's Nos. 1, 2, 4, and 5 (including numbers, respectively), the purport of the whole pleadings.

D. Determination

1) In the case of title trust of real estate to a third party, if the title truster transfers the real estate to the third party and the income accrued from such transfer was attributed to the title truster, under the substance over form principle, the person liable to pay the relevant capital gains tax shall not be deemed to be the person liable to pay the said income tax (see, e.g., Supreme Court Decisions 96Nu6387, Oct. 10, 1997; 98Du7084, Nov. 26, 1999).

In full view of the following circumstances, which are acknowledged as above, the Plaintiff’s motive and circumstance leading up to the transfer registration of the ownership of the instant real estate, the flow of funds relating to the sales contract between the Plaintiff, ParkA, and LeeA, and the Plaintiff holding a registration right to the instant real estate; the Plaintiff still owned the Plaintiff’s OO-dong 124-3 and 820 square meters of the instant real estate, including the instant real estate at the beginning, for which the Plaintiff had not been subject to enforcement fines among three lots of real estate sold at the beginning; and the Plaintiff’s disposal of the instant real estate under the premise that the Plaintiff was a joint and several surety of ParkA after the completion of the registration of the transfer of the ownership to the instant real estate, and that even after the completion of the registration of the ownership transfer, the Plaintiff’s disposal of the instant real estate under the premise that the Plaintiff was subject to the establishment of the title trust registration of the instant real estate under the premise that the Plaintiff was not subject to the establishment of the title trust registration of the instant real estate under the premise that the title trust registration was made against the Plaintiff.

In addition, the plaintiff alleged that the plaintiff did not have accrued profits from the sale of the goods by auction at will. Accordingly, on July 19, 2010, the development of the ZZ paid the plaintiff an OOO of the secured debt of the plaintiff's establishment of a mortgage on February 22, 2010, and on October 7, 2010, the plaintiff paid the plaintiff the secured debt of the establishment of a mortgage on January 21, 2003, which is the debtor, to the plaintiff on behalf of the plaintiff, for payment of the secured debt of the establishment of a mortgage on January 21, 2003, which is the debtor, to the effect that the plaintiff was exempted from the above debt. Accordingly, according to the above facts of recognition, it cannot be deemed that the plaintiff did not have accrued profits, and therefore the plaintiff's assertion on this part cannot be accepted.

2) The Plaintiff asserts that capital gains tax should be imposed only on the Plaintiff for 1/2 of the capital gains on the instant real estate. However, the fact that the instant disposition was appropriated only for 1/2 of the capital gains on the instant real estate, as seen earlier, is without merit, this part of the assertion is without merit.

On the other hand, in full view of the purport of Gap evidence No. 3 and all the arguments, the plaintiff filed a report and payment of capital gains tax OOOO as of March 29, 2006 and April 6, 2006 after completing the registration of transfer of ownership with Lee Dong-A. Thus, the plaintiff asserts that this payment portion should be illegally returned to the plaintiff.

The plaintiff's above assertion is without merit, as it is not unlawful to deduct the above amount paid by the defendant for the calculation of the tax amount of this case, even though the plaintiff's above amount is to be refunded from the defendant through the procedure to return unjust enrichment, etc.

3. Conclusion

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