Daegu High Court-2013-Nu-10374 ( October 17, 2014)

Presumption of deemed title trust donation and burden of proof of tax avoidance

In each title trust of this case, it is insufficient to prove that there was an obvious objective irrelevant to the tax avoidance or there was no tax avoidance at the time of each title trust or there was no tax avoidance at the time of each title trust. The application of the gift presumption provision cannot be avoided solely on the ground that the nominal owner did not have an objective of tax avoidance.

All appeals are dismissed.

The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined. Any supplementary appellate brief not timely filed.

The grounds of appeal are examined to the extent of supplement in case of grounds for appeal.

The former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) and the 2003.

Article 41-2(1) main text of Article 41-2(1) and Article 45-2(1) main text of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007) provide that “where the actual owner and the nominal owner are different, the value of the property shall be deemed to have been donated to the actual owner on the date on which the registration, etc. is made to the nominal owner, notwithstanding Article 14 of the Framework Act on National Taxes.” Meanwhile, Article 41-2(2) main text of the same Act provides that “where the property is registered in another’s name without any purpose of evading taxes, the same shall not apply.”

After finding the facts as stated in its reasoning, the lower court determined that each of the instant dispositions was lawful on the ground that it was insufficient to prove that there was an obvious objective irrelevant to the tax avoidance or there was no tax avoidance at the time of each of the instant title trust or there was no tax avoidance in the future, and that the nominal owner cannot avoid the application of the gift presumption provision on the sole basis of the fact that there was no purpose of tax avoidance.

Examining the record in light of the aforementioned provisions and relevant legal principles, the lower court did not exhaust all necessary deliberations in finding facts, contrary to what is alleged in the grounds of appeal, and did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on the purpose of evading taxes on deemed gift from title trust.

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.