Whether the sale price of the free contract falls under the price or transaction price.

Since the value of a negotiated contract falls under the transaction amount and should be recognized as the market price of the gift shares of this case, the value of the gift shares of this case without recognizing it as the market price is unreasonable.

Article 60 of the Inheritance Tax and Gift Tax Act: Principles of Appraisal, etc.

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

the Gu Office's place of service and place of service

1. Purport of claim

The Defendant’s imposition of gift tax of KRW 1,473,458,286 on January 11, 2005, and KRW 694,350,882 on January 7, 2005, each disposition of imposition of gift tax of KRW 1,473,458,286 against Plaintiff Song-○ on January 11, 2005 is revoked.

2. Purport of appeal

The judgment of the first instance is revoked. All of the plaintiffs' claims are dismissed.

1. Details of the disposition;

A. On August 11, 2000, the Korea Asset Management Corporation was entrusted by the Ministry of Finance and Economy with the sale of 2,710 non-listed shares issued by ○○○○ (hereinafter referred to as “non-listed shares”) (hereinafter referred to as “instant sales shares”) and commenced a public auction procedure by setting the minimum estimated sale price per share of the instant sales shares as 3,148,480 won, but there was no bid participants, and all public auctions more than three times were failed.

B. On July 6, 2001, the Korea Asset Management Corporation: (a) at least 2,513,984 won (total amount of KRW 6,812,897,00) per share of the stocks not sold at the tender at the time of the fourth public tender notice; and (b) stated that it is possible to conclude a private contract by the day preceding the public auction notice; (c) on July 24, 2001, the Plaintiff Song○ acquired the stocks to be sold in the name of Song○ and Song○, one of its own children, by a private contract method, at KRW 2,513,984 per share of the stocks sold at the public tender at the time of the fourth public tender notice (hereinafter “instant private contract price”).

C. On the other hand, on September 27, 2001, 000, 00, 000 shares of the non-party company 741 shares of the non-party company and 1,142 shares of the 401 shares of the 401 shares of the 1,142 shares of the 401 shares of the 1,142 shares of the 1,142 shares of the 1,513,984 shares of the 2,513,984 shares of the 1,862,862,14 shares of the 1,862,144 shares of the 1,513,984 shares of the 2,000 shares of the 1,862,513,984 shares of the 2,000 shares of the 1,000 shares of the 1,000 shares of the 1,000 shares of the 1.

D. As to this, the Defendant assessed the value of the gift of this case as the market price of the gift of this case according to the supplementary method of assessment pursuant to Articles 60 and 63(1)1(c) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002; hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”) and Article 54(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828 of Dec. 30, 2002), and assessed the value of the gift of this case as 6,135,025 won per share of the gift of this case as 4,546,53,525 won (741 week X6,135,025), Plaintiff Song-○,460,1405,025 won (hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”).

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 and 2; Gap evidence Nos. 1, 2, Eul evidence Nos. 2 and 4; the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The plaintiffs' assertion

According to Article 60 of the former Inheritance Tax and Gift Tax Act and Article 49(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act on the evaluation of donated property, where there is a fact of sale or public sale of the pertinent property, the transaction value or public sale value shall be deemed market value (Article 49(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act in the case of sale, and Article 49(1)3 in the case of public sale). Thus, the instant negotiated contract amount constitutes a public sale value under Article 49(1)3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, and even if not, it constitutes a domestic transaction

(2) The defendant's assertion

(A) Article 49(1)1 and 3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act refers to the property on which the gift tax is levied. Since the sales shares of this case are shares of the same kind as the gift shares of this case and do not correspond to the "relevant property" of the above provision, the above provision cannot be applied.

(B) Even if the pertinent property falls under a public auction due to its nature, the pertinent negotiated contract cannot be deemed as a public auction price under subparagraph 3. Furthermore, even if the instant negotiated contract price is the transaction price under subparagraph 1, the said transaction price is objectively unfair and subject to the proviso of subparagraph 1. Thus, the instant negotiated contract price does not fall under any of Article 49(1)1 and 3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, and thus, it cannot be deemed as the market price of the instant donated shares.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Whether the property is concerned

Article 49(1)1 and 3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that the transaction price, compensation price, auction price, or public auction price of the pertinent property shall be deemed to be the market price under Article 60(2) of the former Inheritance Tax and Gift Tax Act. According to the language and text of the above provision, it may be interpreted as if there is a fact of sale or public auction on the property subject to gift tax itself. However, regardless of whether a non-listed corporation is an unlisted corporation, the same kind of shares issued by a stock company cannot be economically high, and the purport of the above provision is to properly calculate the market price of the property subject to gift tax. Furthermore, considering that the above provision is purported in calculating the market price of the same shares with an equivalent value on the ground of the above language and text, it is reasonable to view that the pertinent shares constitute the pertinent property under the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (On the other hand, since the former Enforcement Decree of the Inheritance Tax and Gift Tax Act was amended on December 30, 2003, the Defendant’s assertion that the pertinent shares are identical or similar to the property under paragraph (1).

(2) Whether the contract price of this case constitutes a public sale price or transaction price

In general, a public sale is conducted by a public agency to disclose an opportunity for purchase to the general public, and a private contract is a contract to select and conclude an appropriate other party at will instead of a competitive contract. Thus, the essence of the contract is different in that it is the existence of competition in the process of selecting the contractor. Furthermore, inasmuch as the National Tax Collection Act separates a public sale (Article 61) and a private contract (Article 62) through realizing the attached property and separately treats the requirements of a private contract, even if the public notice of the possibility of a private contract during the process of public sale of the sold stocks of this case was given, the private contract on the sold stocks of this case cannot be deemed the same as the public sale. Accordingly, the private contract price of this case cannot be accepted as the plaintiff's assertion that the private contract price of this case is the public sale price under Article 49 (1) 3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act. However, since a private contract on the sold stocks has the nature of a private contract, the sale price of this case constitutes the amount of a private contract.

(3) Whether the instant negotiated contract value is objectively unreasonable

(A) Furthermore, according to the provisions of Article 49(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18358, Apr. 6, 2004) with respect to whether the instant negotiated contract value is objectively unfair, and thus, cannot be deemed as the market price under the proviso of Article 49(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, where the State disposes of non-listed stocks, which are miscellaneous assets held by the State, the expected disposal price should be calculated by considering the asset value, profit value, and relative value calculated in accordance with the calculation method as prescribed by the Ordinance of the Ministry of Finance and Economy. As such, the instant negotiated contract value (2,513,984 won) appears to be the amount calculated in accordance with such calculation method, and the instant negotiated contract value (2,513,984 won) is inevitably reduced due to the continuous public sale at 80% of the above scheduled sale price. Thus, the instant negotiated contract value itself cannot be deemed objectively unfair.

(B) As to this, the Defendant asserts that the free contract price of this case is objectively unfair considering the following: (a) the non-party company is a corporation excessively owned real estate, whose net asset value per share reaches 4,719,250 won per share; (b) the sales share was assessed as KRW 6,121,152 per share at the time of payment in lieu of inheritance tax to be paid by the Plaintiffs; and (c) the appraisal of the gift shares of this case requires a management premium to be recognized. In addition, according to Article 38(1)1 of the Enforcement Decree of the State Property Act, the minimum estimated sale price of the non-listed shares determined pursuant to the same subparagraph shall be considered as value of assets in principle; and (d) as the Defendant was the person, the above payment in kind shall not be determined as the minimum sale price of the non-party company’s stocks at the time of the commencement of management rights pursuant to Article 54(2)3 of the former Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 16660, Dec. 31, 1999).

(4) The theory of lawsuit

The value of this case’s negotiated contract falls under the transaction amount under Article 49(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, and thus, it should be recognized as the market value of the gift stocks of this case. Thus, the disposition of this case, which assessed the value of the gift stocks of this case according to

3. Conclusion

Therefore, the plaintiffs' claim of this case is accepted on the grounds of its reasoning, and the judgment of the court of first instance is just and it is dismissed as the defendant's appeal is without merit. It is so decided as per Disposition.

Related Acts and subordinate statutes

○ former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002)

Article 60 Principles, etc. of Appraisal

(1) The value of property on which an inheritance tax or gift tax is levied under this Act shall be the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as the "date of appraisal"). In such cases, the value appraised by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63 (2))

(2) The market price referred to in paragraph (1) shall be the price which is deemed to be normal in cases of free trade between many and unspecified persons, and shall include the price of expropriation, public auction, appraisal price, and others which are deemed to be the market price

(3) In applying paragraph (1), where it is difficult to compute the market price, the price assessed by the methods prescribed in Articles 61 through 65 shall be based on the types, scale, transaction conditions, etc. of the relevant property.

○ former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002)

Article 63 Evaluation of Securities, etc.

(1) The appraisal of securities, etc. shall be conducted by the following methods:

1. Appraisal of stocks and investment shares:

(c) Stocks and equity shares not listed on the Korea Stock Exchange other than those under item (b) shall be appraised according to the method prescribed by the Presidential Decree in consideration of corporate assets and revenues

Article 49 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828, Dec. 30, 2002) (amended by Presidential Decree No. 17828

(1) The term "those recognized as the market price as prescribed by Presidential Decree, such as the expropriation or public sale price, the appraisal price, etc." in Article 60 (2) of the Act means, in cases of sale, appraisal, expropriation, or auction (referring to an auction under the Civil Procedure Act; hereafter the same shall apply in this paragraph) or public auction during a period not exceeding six months (three months in the case of donated property) before or after the base date of appraisal, the amount verified pursuant to the provisions

1. The transaction value, if any, of the relevant property: Provided, That the transaction value is deemed objectively unfair, such as the transaction value with a person with a special relationship provided for in Article 26 (4), shall be excluded;

3. Where there exists a fact of expropriation, auction or public sale of the property concerned, the amount of compensation, the amount of auction or public sale;

○ Article 54 Appraisal of Non-listed Stocks

(1) Stocks and investment shares not listed on the Korea Stock Exchange (hereinafter referred to as “non-listed stocks” in this Article) under Article 63 (1) 1 (c) of the Act shall be the value assessed by the following formula:

The value per share = The weighted average amount of net profits and losses for the latest three years per share ± the rate prescribed by the Ordinance of the Ministry of Finance and Economy in consideration of the average interest rate formed in the financial market (hereinafter referred to as the “net value of profits and losses”).

(2) Where the value of unlisted stocks appraised under paragraph (1) falls short of the value appraised by the following formula, the value shall be the value appraised by the following formula:

The value per share = the net asset value of the corporation ± the total number of stocks issued (hereinafter referred to as “net asset value”).

(3) In applying the provisions of paragraphs (1) and (2), where a corporation that has issued stocks or investment shares under Article 63 (1) 1 (c) of the Act owns stocks or investment shares not more than 10/100 of the total number of stocks issued by a corporation that has issued other unlisted stocks, the assessment of the other unlisted stocks may be based on the acquisition value provided for in Article 74 (1) 1 (e) of the Enforcement Decree of the Corporate Tax Act notwithstanding the provisions of paragraphs (1)

○ Method of concluding Article 33 of the State Property Act

(1) A contract to dispose of miscellaneous property shall be concluded through a competitive bidding after public notice inviting tenders: Provided, That in cases prescribed by the Presidential Decree, the contract may be concluded through a designated competitive bidding or limited competitive bidding or a free contract, and in cases of securities, the method of public sale of securities pursuant to Article 2 (4) of the Securities and Exchange Act may

○ Enforcement Decree of the former State Property Act (amended by Presidential Decree No. 18358 of Apr. 6, 2004)

Article 38 (Method of Sale of Securities)

(1) In case where securities are sold pursuant to the provisions of Article 33 of the Act, the estimated price thereof shall not be less than the following amount, and it shall be open to the public: Provided, That where stocks of a government-invested corporation are sold, the estimated price thereof may not

1. In cases of unlisted stocks, the amount that is calculated by taking into account the value of assets, profits, and relative values computed by the calculation formula prescribed by the Ordinance of the Ministry of Finance and Economy: Provided, That in cases prescribed by the Ordinance of the Ministry of Finance

Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 16660 of Dec. 31, 199) shall be evaluated as non-listed stocks

(2) Where any of the following applies to unlisted stocks, the appraised value according to net asset value shall be based on the value of unlisted stocks:

3. Stocks or equities of a corporation in which the ratio occupied by the sum of assets (referring to the sum of the values appraised under the provisions of Articles 60, 61 and 66 of the Act) under the provisions of Article 61 (1) and (5) of the Act among the total assets of the corporation concerned (referring to the total assets appraised under the provisions of Chapter IV of the Act) is not less than 50/100.