Cho High Court Decision 201Do1324 ( December 06, 2012)

The timing of inclusion of bad debts in deductible expenses and whether reserves for exercising stock options are deductible expenses.

In filing a claim for correction of bad debt amount, the burden of proof on the "completion of extinctive prescription" under Article 62 (1) 1 of the Enforcement Decree of the Corporate Tax Act cannot be deemed to have fulfilled the burden of proof on the plaintiff. The parent company's amount subsidized to the amount of compensation for expenses incurred in exercising stock option

Article 34 of the Corporate Tax Act and Article 62 of the Enforcement Decree of the same Act

2013Guhap6824 Disposition of revocation of refusal to correct corporate tax

00 Banks, Inc.

00. Head of tax office

October 11, 2016

November 11, 2016

1. The defendant's refusal to correct the amount exceeding KRW 00,000 among the disposition of refusal to correct the corporate tax of KRW 200,000 for the business year of 200x.x. the defendant's disposition of refusal to correct the amount exceeding KRW 00,000 for the business year of 200x.x. The part exceeding KRW 00,000 among the disposition of refusal to correct the amount of corporate tax of KRW 200,00

2. The plaintiff's remaining claims are dismissed.

3. 9/10 of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

1. Details of the disposition;

△ Card Co., Ltd. established the 00 x. x. x. 00 Mal Card Co., Ltd. (hereinafter referred to as the 00 LLC), and then sold the credit card bonds of 00 billion won to the 00 x. x. x. x. m. (hereinafter referred to as the 00 x. c., the 00 x. c. (hereinafter referred to as the 00 x.) and the 00 m. limited liability company decided to grant credit to the asset-backed bonds issued

Meanwhile, on the other hand, △ Card was established by the 00x.x. x. 200x. x. 200x. Dol Card was established by the 00th Specialized Asset-backed Company (hereinafter referred to as the 00th Specialized Company, and the 00th and 00th Specialized Company added to the 00th Specialized Company) and sold credit card bonds of KRW 00 billion to the 00th Specialized Company (hereinafter referred to as the 00th Specialized Company, and the 00th Specialized Asset Transfer Agreement was added to the 00th Specialized Company, and the 00th Specialized Company provided credit to the bonds issued by the 00th Specialized Company with the above card bonds as the basic assets (hereinafter referred to as the 'the Credit Extension Agreement').

After the Plaintiff merged x. x. x. the Plaintiff acquired 00,00 card bonds (0,000) from the 00th limited liability company, and 00,000 card bonds (0,000) from the 00th limited liability company (hereinafter referred to as "credit card bonds of this case", and "payment paid when the Plaintiff acquired card bonds from the 00th limited liability company") upon the request of the 00th limited liability company. The Plaintiff deemed that the cause of bad debt under the Corporate Tax Act has not occurred until the liquidation of the 1999 limited liability company, and conducted tax treatment as non-deductible losses (the 00th limited liability company was liquidated on xx. x. x. 200, and the 00th limited liability company was liquidated on x. x. 200).

On the other hand, the Plaintiff implemented the stock option agreement with its executives and employees as the difference compensation method. On September 29, 2008, the Plaintiff’s establishment of the Plaintiff’s Financial Branch Co., Ltd. through the comprehensive transfer of the Plaintiff’s shares and delistinged the Plaintiff’s shares, the Plaintiff changed the stock option agreement to calculate the difference compensation based on the Plaintiff’s stocks instead of the Plaintiff’s shares. Upon exercising the stock option, the Plaintiff paid KRW 00 million in the business year 200x and KRW 0,000 in the business year 20x with the exercise cost (hereinafter “instant stock option cost,” while the Plaintiff did not include the same expenses in deductible expenses in calculating the corporate tax base).

x. x. x. The price paid to the Defendant to the Defendant is the 200x business year settled by the 00th limited liability company, the price paid to the 00th limited liability company, the 200x business year liquidated by the 00th limited liability company, and the stock option cost paid to the officers and employees, respectively.

20x business year and 200x business year, and the reduction or correction of corporate tax for each business year shall be included in deductible expenses.

B. However, the Defendant rejected the request (hereinafter referred to as “instant disposition”). x.x. The Defendant rejected the request (hereinafter referred to as “instant disposition”).

2. Whether the instant disposition is lawful

A. Regarding the price of the instant case

1) The nature of the instant price

In full view of the following facts and circumstances, it is difficult to view that the Plaintiff paid the instant amount to the instant limited liability company as a loan, and it seems that the credit card acquisition price was paid.

① The Plaintiff asserts to the effect that the instant price was paid as a loan to the instant limited liability company, and that the instant card claim was owned as collateral.

However, according to the Credit Extension Agreement entered into with the Plaintiff No. 00 limited liability company, in the event that the 00 limited liability company falls short of repaying the principal and interest of the securitization bonds issued on the basis of the securitization assets acquired from the Plaintiff, the Plaintiff intended to lend funds within the limit of 000,000 to the Plaintiff to extend credit to the insufficient amount. Before the total amount of the securitization bonds is paid, the Plaintiff occupied the assets of the 00 limited liability company for the purpose of securing the assets of

shall not be collected or disposed of (Article 7).

Since the Plaintiff had a duty to lend funds to the instant limited liability company in accordance with the credit extension agreement, it is difficult for the instant limited liability company to find out special circumstances to borrow funds, separate from the instant credit extension agreement. If the Plaintiff pays a loan, as alleged by the Plaintiff, and holds a credit card claim for the purpose of securing collateral, it would be contrary to the said credit extension agreement so that it cannot exercise its right to the property of the limited liability company before the total amount of the securitization bond is paid.

(2) Article 6 (1) 2 (a) of the Asset-Backed Securitization Act shall apply to assets owned by a special purpose company, etc.

against the obligor on the grounds that the securitization assets are transferred to the originator or the transfer thereof is revoked in accordance with the plan.

When refunding, a special purpose company, etc. shall register the fact with the Financial Services Commission.

section 1.

The 00x. x. x. 200x. the Plaintiff transferred 00,00 credit card bonds, etc. to the Plaintiff (00,000 won in transfer value), and the 000 limited liability company also transferred 00,000 credit card bonds, etc. to the Plaintiff (00 million won in transfer value) (the purpose of the 200,000 transfer value is to dispose of assets for repayment of securitization bonds) on the same day. The Plaintiff asserted that the credit card bonds, etc. transferred by the limited liability company are not the instant credit card bonds, but there is no evidence to acknowledge such assertion (it is difficult to view that only the amount paid for the instant credit card bonds, etc., in light of the size and value of the transfer).

In view of the Plaintiff’s corporate tax base and tax return return, “The items of 200x SPC redemption loss” and “the amount is identical to the amount of this case’s tax adjustment reserve item.” The above items can be confirmed even in the Plaintiff’s corporate tax return in 201x, and the name of the item is “ir redemption loss”, it is difficult to view the nature of the instant amount as loans (the name of the assessment report that the Plaintiff used as the basis for calculating the market price of the instant credit card bonds).

Meanwhile, the Plaintiff asserts that the amount of the instant credit card can be seen as a loan within the scope exceeding the market price of the instant credit card claim. However, even if the report on appraisal of asset held by the Plaintiff (Evidence A) based on the market price calculation, it is insufficient to recognize that the amount of the instant credit card claim was acquired in excess of the market price or the portion claimed by the Plaintiff was in excess of the market price of the instant credit card claim, on the premise that the delayed collection rate was calculated based on the premise that the previous credit collection trend was equally reflected in the future, and that there was no problem as to whether it is possible to exercise the right to the claim and the actual existence of the claim, and thus, the market price was calculated based on such appraisal report. Therefore, there is no other evidence to support this.

B) Whether the extinctive prescription of the instant credit card claim has expired

In addition to the statement No.x Nos. 1 and the fact-finding inquiry report by △ Card Co., Ltd., the whole purport of the pleadings, i.e., 10 out of the 28 financial transaction information of this case, which exceeds KRW 10,000,00, is the fact that the cause for interruption of the statute of limitations has occurred (as part of the 10 cases were recovered, but this part was not included in gross income) and ii) in the remaining 18 cases, the fact that the cause for interruption of the statute of limitations has occurred. However, even though the response was confirmed, the plaintiff entrusted the collection of the above claims to the specialized collection agency before the statute of limitations expires

In light of the fact that the extinctive prescription of part of card bonds was not completed and the grounds for interruption of the extinctive prescription were confirmed to have occurred (not included in gross income as to the recovered credit), and that if the Plaintiff entrusted the collection of the instant credit card bonds to the specialized agency for collection, it would have been assumed that the specialized agency for collection was going to proceed with the collection procedure, it cannot be deemed that the Plaintiff fulfilled the burden of proving that the extinctive prescription of the instant credit card

Therefore, it is difficult to view that the credit card claim of this case was extinguished due to the expiration of the extinctive prescription, and there is no other evidence to acknowledge it

B. Regarding the instant stock option costs

Article 19 of the former Corporate Tax Act (Amended by Act No. 10423, Dec. 30, 2010; hereinafter the same shall apply)

Paragraph (1) "deductible expenses" shall be refunded of capital or financing, disposal of surplus funds, and those provided for in this Act.

(b) the amount of losses incurred by transactions which reduce the net assets of the corporation.

section 19(3) of the Enforcement Decree of the Corporate Tax Act provides that "(3) of the same Act shall be subject to section 19(1) of the same Act.

One of the losses refers to "labor cost".

After the Plaintiff became an existing company of the financial branch with respect to the stock options that the Plaintiff granted to its executives and employees, the Plaintiff granted the stock option by calculating the difference compensation based on the shares of the financial branch with respect to the stock options, and the Plaintiff’s executives and employees exercised the stock option in 200x and 200x, the fact that the Plaintiff paid the expenses for exercising the stock option to the financial branch owner of the

The stock options that a corporation grants to its executives and employees shall contribute to the creation of corporate profits by inducing future profits from the purchase of stocks as consideration for the provision of labor. The expenses for exercising the stock options that the corporation preserves to the parent company are ultimately attributed to the corporation’s expense. In addition, Article 19 subparag. 19 of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 4, 2009) which is amended by Presidential Decree No. 21302 of the Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 4, 2009) provides for the amount of compensation for exercising the stock options granted to the corporation granting the stock options as deductible expenses under Article 19(1) of the former Corporate Tax Act (amended by Presidential Decree No. 199 subparag. 3 of the former Enforcement Decree of the Corporate Tax Act) is also the purpose

The portion of the disposition of this case, which did not correct corporate tax for the 200x business year and 200x business year as follows, by including the preservation amount as deductible expenses, is illegal.

3. Conclusion

Thus, the plaintiff's claim of this case is accepted within the scope of the above recognition, and the remaining claim is dismissed as it is without merit.