Since the objective data to verify the actual transaction price of the instant real estate acquisition itself is nothing more than that, it is legitimate to calculate the acquisition price by the conversion price.

Since the objective data to verify the actual transaction price of the instant real estate acquisition itself does not exist, it is legitimate to calculate the acquisition price by the conversion price according to the prescribed standard under the income tax law.

2014Gudan1123 Revocation of Disposition of Imposing capital gains tax

NoteO

AA Head of the Tax Office

November 27, 2014

December 11, 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 imposing capital gains tax on the Plaintiff on August 19, 2013 is revoked.

1. Details of disposition;

On November 21, 1985, the Plaintiff acquired an O-O-O large scale and its ground building (hereinafter referred to as “the instant real estate”) and transferred on May 18, 2010 for sale due to the auction of real estate. On August 1, 2013, the Defendant issued a disposition imposing an OOOO of the capital gains tax for the year 2010 (hereinafter referred to as “instant disposition”) on the Plaintiff on August 1, 2013. The fact that the Plaintiff received a decision of dismissal from the Tax Tribunal on May 12, 2014 upon the Plaintiff’s filing of a petition for a tax appeal after filing an objection, is either not disputed between the parties, or recognized by the evidence No. 1, No. 6 through No. 10 (including a serial number, hereinafter the same shall apply).

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff acquired the instant real estate in the OO and disbursed the OO and performed the renovation and repair work on three occasions, and thus, it should be deducted as necessary expenses. However, it is unlawful that the Defendant calculated the acquisition value based on the conversion price, which is not the actual transaction price for the acquisition of the said real estate, and did not recognize this portion of the deduction.

B. Relevant legal principles

According to Article 97(3) of the former Income Tax Act (amended by Act No. 10408, Dec. 27, 2010); Article 163(3) and (6) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 23588, Feb. 2, 2012) where the acquisition value of assets is based on the actual transaction value, the necessary expenses that can be deducted from the calculation of gains on transfer may include the capital expenditure or the cost of lawsuit directly required for the acquisition of ownership. However, the actual transaction value at the time of the acquisition of assets cannot be confirmed.

Where the acquisition value is calculated by conversion value, necessary expenses other than acquisition value shall be the time of acquisition.

It can be recognized only as an amount equivalent to 3% of the standard market price of real estate, namely, an estimated deduction amount.

The actual transaction price, which is the basis for calculation, is the general market price reflecting objective exchange values.

In addition, the actual amount of the transaction itself or at the time of the transaction as agreed in practice.

The value of a letter (see, e.g., Supreme Court Decisions 97Nu629, Feb. 9, 199; 2006Du7171, Apr. 26, 2007) is the value objectively recognized by a sales contract or other documentary evidence.

(c) Fact of recognition;

The following facts are recognized if each of the above evidence included in Eul evidence and the fact-finding results of this Court's Seodaemunbook.

(1) On May 18, 2010, the Plaintiff did not report the transfer income tax even after selling the instant real estate to the OOO in the auction procedure for real estate rent, the Defendant calculated the conversion acquisition value of the said real estate by applying the OO and necessary expenses to the OO won according to the estimated deduction method prescribed in the Income Tax Act and then disposed of the instant disposition on August 1, 2013.

(2) On November 14, 2013, upon filing an objection against the Plaintiff’s instant disposition, a decision was made to re-examine the actual transaction price and necessary expenses of the instant real estate and to correct the tax base and tax amount. However, as long as the aforementioned real estate sales contract and documentary evidence were not presented as a result of the tax investigation, the Defendant made a decision that the instant disposition was justifiable after deducting only necessary expenses by the estimated

(3) On November 21, 1985, the Plaintiff acquired the pertinent real estate from B on the closed registration date with respect to the instant real estate, and on January 17, 1984, on the previous date, on January 17, 1984, the registration of provisional attachment in KimD, E, and JF, and the registration of establishment of chonsegwon equivalent to 00 won for lease deposit in the name of G, including the registration of creation of a neighboring mortgage in the name of CC Bank on January 17, 1984.

(4) Meanwhile, on November 21, 1985, the Plaintiff asserted that the instant real estate was purchased from BB in KRW 145,000,000, and filed a lawsuit against B seeking confirmation of the amount of the purchase price was concluded by the Seoul Central District Court Decision 2013Gahap00, and there was no tax payment details related to BB’s transfer of the said real estate.

D. Determination

Therefore, there is no defect that the Defendant calculated the acquisition value of the real estate in accordance with the conversion price according to the standard prescribed in the income tax law, since the objective data itself to confirm the actual transaction value of the real estate acquisition of the instant real estate and the amount estimated by the maximum debt amount of the right to collateral security on the closed real estate register of the said real estate cannot be deemed to be the value objectively recognized by the sales contract or other evidentiary documents. Thus, there is no error in calculating the acquisition value of the said real estate. Ultimately, as necessary expenses other than the acquisition value that may be deducted in calculating the transfer value of the instant real estate are the estimated deduction amount calculated based on the standard market price at the time of acquisition, it cannot be deducted as necessary expenses without any further review about the construction cost claimed by

3. Conclusion

The claim is dismissed for lack of reason.