National Tax Service Review and Transfer 2010-0175 (Law No. 23, 2010)

No land directly cultivated for at least eight years shall be deemed land.

There is no evidence to prove that he/she resided in the area of his/her own land and has cultivated directly for not less than eight years, and it is difficult to view that the land category of the non-project-related land falls under the forest land in fact, and there is no other evidence to prove that it falls under the forest land.

2010Gudan22774 Revocation of Disposition of Imposing capital gains tax

XX

Samsung Head of Samsung Tax Office

May 27, 2011

July 8, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of capital gains tax of KRW 57,010,550 for the Plaintiff on April 1, 2010 and capital gains tax of KRW 281,303,080 for the year 2008 shall be revoked.

1. Details of the disposition;

A. On August 5, 1996, the Plaintiff acquired and possessed each real estate listed in the table (hereinafter collectively referred to as the “instant land”) and transferred the instant 1 and 2 land to Ansan on January 4, 2008, and transferred the instant 3 and 5 land to Gamb on May 15, 2009, and the Plaintiff directly cultivated the instant land for at least eight years while residing in the location of the instant land, upon filing a report on the tax base of transfer income from the transfer of the instant land, and filed an application for reduction and exemption of transfer income tax under Article 69(1) of the Restriction of Special Taxation Act.

(The following table omitted):

B. On January 1, 2010, the Defendant: (a) deemed that the Plaintiff did not directly cultivate the instant land for at least eight (8) years after conducting on-site verification; and (b) deemed that all the instant land 1, 3, and 5 were land for non-business use; (c) applied the special long-term holding deduction without applying the special long-term holding deduction; and (d) on April 1, 2010, by applying the heavy taxation rate of 60% with respect to the instant land, the Defendant issued each of the instant dispositions imposing tax in which the Plaintiff corrected and notifies the transfer income tax of 57,010,550 won for the transfer income tax of 208 and the transfer income tax of 281,303

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1 and 2 (including above numbers), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) Since the Plaintiff resided in the location of 661m2 (hereinafter referred to as “self-arable land”) among the three land of this case, which is farmland, for not less than eight years, and directly cultivated it, the transfer of the said land portion is subject to reduction of capital gains tax pursuant to Article 69(1) of the Restriction of Special Taxation Act.

(2) The remaining parts of the instant 3 and the instant 1,4, and 5 land (hereinafter collectively referred to as “non-business-related land”) are forests and fields, and since the Plaintiff resided in the forest and field, the Plaintiff does not fall under the non-business land pursuant to Article 104-3(1)2 (b) of the Income Tax Act, and thus, the amount of special long-term holding deduction should be deducted for 10 years or longer in calculating the transfer income. 60%, which is the heavy tax rate applied to the instant 1 land, shall not be applied.

(3) Even if the arguments above (1) and (2) are not accepted, the land of this case 3, 4 is located in a development restriction zone, and thus does not constitute land for non-business use pursuant to Article 104-3 (1) 1 (b) of the Income Tax Act.

(4) Each of the instant dispositions by the Defendant on the premise that the above is different from that of the above is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Whether it constitutes a self-farmland

With respect to whether the plaintiff resided in the location of the land at issue of self-defense and directly cultivated for not less than eight years, "direct cultivation" here means that a resident engages in cultivating crops or growing perennial plants on his own farmland at all times, or cultivating or cultivating not less than half of farming work with his own labor (see Article 66 (13) of the former Enforcement Decree of the Special Taxation Act), and it can be known by adding to the whole purport of pleading the statement in Articles 5, 12, 1, 1, 3, 3, 5, 2, 1, 3, 2, 3, 9 (including each number), and 6, considering the following circumstances: considering the evidence submitted by the plaintiff, such as the statement in subparagraphs 1, 2, and 17-1, 1, 2, etc., in the location of the land at issue of self-defense, it is insufficient to recognize that the plaintiff resided in the location of the land at issue of self-defense and there is no other evidence to support this part of the plaintiff's assertion

① Even after purchasing the instant land, the Plaintiff worked in the publishing company from 200 to 200, while engaging in the publishing business by acquiring the said publishing company’s business from April 10, 2001. The said publishing company’s trade name was changed from “OO company” to “△△△△” on December 11, 2006.

② The sales volume of the above publishing business reaches KRW 1,041,732,480 in the case of 2009.

③ There was no farmland ledger in the name of the Plaintiff as to the instant land, and the Plaintiff did not receive direct payments from the Government.

④ On August 5, 1996, the Plaintiff acquired XX 000-0 square meters and approximately 191 square meters on the same day, and filed a registration of preservation of ownership on the light steel frame (prefabricated type) and 50.40 square meters on the same day, and on May 28, 1996, the Plaintiff and ASEAN filed a move-in report on the said housing location on May 28, 1996. However, the Plaintiff’s children were enrolled in the Hayk-si and HadD’s children, and continued to move to the Seoul High School on May 3, 2001, and continued to work for schools in Seoul, and the said Jung-CC transferred to the Seoul High School on May 2, 2001.

⑤ The Plaintiff did not submit objective evidence regarding the sale of crops, harvest, sale or consumption of crops, fertilizers for cultivation, oil, and purchase of farm equipment, etc. on the instant land.

④ On November 13, 2007, the Plaintiff appears to have agreed to use the instant land 1, 3, and 5 when entering into a contract for selling the said land and its ground land to ParkB on November 13, 2007. This is against the Plaintiff’s assertion that he directly cultivated the instant land by the time of transfer on May 2009.

(2) Whether the present situation constitutes forest land or forest land

The Plaintiff asserts, more specifically, at the time of the Plaintiff’s acquisition, that the remaining part of the land of this case 3, except for the self-fluoral land of this case, was growing in 100 scams, and that the land of this case 1, 4, and 5 also consist of trees and miscellaneous trees, etc., and thus, the land of non-business issues constituted “de facto forest that cannot be cultivated.”

In applying the provisions of Article 104-3 of the former Income Tax Act to the scope of land for non-business use, the determination of farmland, forest, stock farms and other land shall be based on the actual status except as otherwise provided by the Enforcement Decree of the Income Tax Act, but if the actual status is not clear, it shall be based on the registration status on the public record (Article 168-7 of the former Enforcement Decree of the Income Tax Act), Article 5 of the former Cadastral Act (amended by Act No. 9774 of Jun. 9, 2009) and Article 5 subparagraph 5 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 21881 of Dec. 14, 2009).

In this case, according to Gap evidence Nos. 16-1 through 3 and Gap evidence Nos. 18, the plaintiff did not have a large number of trees on June 1995, which was one year prior to the acquisition of the land of this case. Trees Nos. 1, 3, 4, and 5 were grown to a certain extent during the period owned by the plaintiff, and the whole trees and grass grow to a large degree or exceeded, and around September 2006, the whole land Nos. 1, 3, 4, and 5 were adjusted without a large number of trees or grass, and since it is difficult to view that the present state of land Nos. 1, 3, 4, and 5 was connected to the land of this case or close to the land of this case, and it is hard to view that the plaintiff was actually in the present state of forest and field formation and its surrounding land as the actual state of forest and field formation and its boundary of each of the plaintiff's land should be determined differently from the present state of forest and field formation and its surrounding land.

On a different premise, there is no reason for the plaintiff's assertion on this part. (The plaintiff seems to have neglected the purchase of the land of this case 1, 3, 4, and 5, which is farmland, which could have been managed and cultivated for its original purpose, so that the number of trees or grasss can not be increased by leaving the land alone without cultivating it for its original purpose. However, it is judged that it would also be consistent with the legislative intent of Article 104-3 of the Income Tax Act to prevent the owner from sufficiently realizing gains on transfer by either focusing on the transfer income tax as non-business land or applying the special deduction

(3) Whether the land in a development restriction zone constitutes non-business land

According to Article 104-3 (1) 1 (b) of the former Income Tax Act and Article 168-8 (4) of the Enforcement Decree of the same Act, land for non-business use under the National Land Planning and Utilization Act does not correspond to land for non-business use under Article 104-3 (1) 1 (b) of the former Income Tax Act, and according to the results of fact inquiry about the 13-1 and 2-2-3 of this court, the plaintiff was within a development restriction zone from the time of acquiring the land in this case 3 and 4 until the time of transfer. However, according to the facts and legal principles as seen earlier, the land in this case 3 and 4 can not be acknowledged that the land in this case did not constitute the land for non-business use under the premise that the plaintiff owned the land in this case exceeds two years, namely, the period exceeding three years immediately preceding the date of transfer, the period exceeding one year immediately preceding the date of transfer, and the period exceeding 20/100 of the period of possession of the land in this case.

3. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.