Spouse Inheritance Deductions

It is reasonable to regard that the inheritance deduction applied only when the spouse's inheritance is reported by the time limit for the division of spouse's inherited property by dividing the inherited property (if the registration of division is required, the registration of division shall be completed) so that there is no change in the actual amount of inheritance by the spouse due to a separate consultation or division.

Article 19 of the Inheritance Tax and Gift Tax Act: Inheritance Deductions

Seoul Central District Court 2017 Gohap521930 Undue gains

○○ Kim et al.

Korea

July 17, 2017

August 16, 2017

1. The plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

The defendant shall pay to the plaintiffs 242,912,063 won with 15% interest per annum from the day following the day of service of a copy of the complaint of this case to the day of complete payment.

1. Basic facts

A. The Plaintiffs are children of the deceased KimA. The deceased on January 9, 2013, and the deceased on January 9, 2013, the deceased spouse statusB and the Plaintiffs of children are the heirs.

B. On July 30, 2013, the Plaintiffs and B completed the registration of ownership transfer by inheritance on January 9, 2013 with respect to respective shares of 2/7 among the 8 real estate listed in the separate sheet No. 1, the Plaintiffs and B, respectively. On August 5, 2013, the Plaintiffs among the 1/7 real estate listed in the separate sheet No. 1 through No. 7, respectively, completed the registration of ownership transfer by inheritance on January 9, 2013.

C. On July 31, 2013, the Plaintiff Kim ○ and the BB reported the inheritance tax on the inherited property including each real estate listed in the separate sheet Nos. 1 and 2 (hereinafter “each real estate of this case”) to the head of ○○ Tax Office, as shown in the following table. At that time, the amount of the inheritance tax was paid as follows.

Gu Sector

○○ Report Contents (won)

(B) the details of the report(if any)

(1) Taxable value of inherited property

2,371,38,174

2,404,160,200

(2) Inheritance deduction amount.

1,395,026,135

1,000,000,000

3. Tax base (1-B)

976,362,039

1,404,160,200

(4) Calculated tax amount.

232,908,611

401,664,080

(5) Tax credit.

23,290,861

-

(6) Amount of tax payable (No.4-n.)

209,617,750

401,664,080

Amount actually paid;

209,617,750

100,000,000

D. On April 17, 2014, the head of the ○○ Tax Office notified the Plaintiffs and B of the details of the inheritance tax base and the amount of tax on the deceased KimA’s inherited property as follows. Around that time, the head of the ○○ Tax Office notified the Plaintiffs and B of the following amount of tax to additionally pay an amount equivalent to the following deducted tax amount by June 30, 2014.

Gu Sector

○ Head of tax office

Calculation Details (won)

Notice of additional tax payable by inheritor;

○ Kim

○X

BB

Value of the inherited property

2,552,003,039

Taxable Value of Inheritance

2,613,156,524

Inheritance Deductions Amount

1,020,000,000

Tax Base

1,593,156,524

calculated tax amount

477,262,609

Tax Credit

34,736,161

Additional Tax

30,148,319

Total determined tax amount

472,674,767

Voluntary Tax Amount

309,617,750

Notice of Deduction Tax Amount

163,057,017

30,241,059

30,241,059

102,574,899

E. According to the instant disposition, the Plaintiffs and the B completed all payments for KRW 476,914,910, including the amount of tax to be deducted as above, as well as the total amount of KRW 472,67,767, the total amount of tax to be determined, as well as the additional amount of KRW 4,240,160.

[Reasons for Recognition] Facts without dispute, Gap evidence 1 through 6, Eul evidence 1 through 6 (including each number; hereinafter the same shall apply) and the purport of the whole pleadings

2. Relevant statutes;

The contents of the former Inheritance Tax and Gift Tax Act (amended by Act No. 12168, Jan. 1, 2014; hereinafter referred to as "Inheritance Tax and Gift Tax Act") applicable to this case are as follows:

Article 19 (Spousal Inheritance Deductions)

(1) The actual amount inherited by a spouse due to the death of a resident shall be deducted from the taxable value of inherited property: Provided, That the ceiling of such amount shall be three billion won (where such amount exceeds three billion won, the ceiling shall be three billion won) calculated by subtracting the tax base (referring to the tax base under Article 55 (1)) on the property donated to the spouse among donated property added to inherited property pursuant to Article 13, from the amount calculated by multiplying the value of the inherited property (excluding property bequeathed, etc. by a testamentary donee who is not an heir, but including property stipulated under Article 13 (1) 1) by the legal portion of inheritance (where a co-inheritors has renounced his/her inheritance, referring to the legal portion of inheritance where the co-inheritors has not renounced his/her inheritance),

(2) A spouse's inheritance deduction under paragraph (1) shall apply where the spouse's inherited property is divided (where registration, registration, transfer of title, etc. is required, limited to such registration, registration, transfer of title, etc.; hereafter the same shall apply in this Article) by six months from the following day of the inheritance tax, one association member's relocation right, etc. under Article 67 (hereafter referred to as "period for division of the spouse's inherited property" in this Article). In such cases, the heir shall report

(3) Notwithstanding paragraph (2), where it is impossible to divide a spouse's inherited property by the due date for the division of inherited property due to extenuating circumstances prescribed by Presidential Decree, and where the return on division of inherited property is filed by six months from the date following the due date for the division of inherited property of the spouse (where the tax base and amount of tax are determined under Article 76 after six months from the date following the due date for the division of inherited property of the spouse, referring to the due date for such determination): Provided, That it shall be limited to cases where

(4) In cases under paragraph (1), if the spouse has no actual amount of succession or the amount of succession is less than 500 million won, 500 million won shall be deducted, notwithstanding paragraph (2).

Article 67 (Tax Base Return of Inheritance Tax)

(1) An heir or testamentary donee liable to pay inheritance tax under Article 3 shall report the taxable value and tax base of the inheritance under Articles 13 and 25 (1) to the head of the competent tax office having jurisdiction over the place of tax payment within six months from the last day of the month to which the date of commencing the inheritance belongs,

3. The plaintiffs' assertion

The head of ○○○ Tax Office, in order to obtain the spouse’s inheritance deduction pursuant to Article 19(1) and (2) of the Inheritance Tax and Gift Tax Act, shall conduct the division of inherited property between the heirs. Since the inheritance deduction did not have been divided between the Plaintiffs and the forestB, the instant disposition was taken to determine the spouse’s inheritance deduction amount as KRW 500,000,000, and notified the Plaintiffs to pay the amount of additional deduction.

However, according to Article 19(1) and (2) of the Inheritance Tax and Gift Tax Act, in the case of an inherited property requiring registration, if only the registration of transfer of ownership according to the inherited property has been completed within the time limit, the spouse's inheritance deduction can be granted. The statusB completed the registration of transfer of ownership on or before January 31, 2014, which is the time limit for the division of inherited property.

Therefore, 1,027,027,195,962 won excluding 25,610,657 won (=1,052,80,619 - 25,610,657 won) of the value of the property actually inherited (2,456,548,778 won of the net value of the inherited property x 3/7 of the inherited property x 3/7 of the inherited property) (i.e., the value of the property for which registration, registration, transfer of title has not been completed by January 31, 2014) (i.e., the value of the property for which registration, transfer of title has not been completed by 25,610,657) falls under the amount of the spouse inheritance deduction under Article 19 of the Inheritance Tax and Gift Tax Act. As such, the head of ○○ Tax office deducts the amount of the spouse inheritance deduction under Article 19(4) of the Inheritance Tax and Gift Tax Act by applying 500,00,00 million won.

Therefore, the defendant should pay the remaining 242,912,063 won and delay damages for the return of unjust enrichment to the plaintiffs exceeding 234,02,847 won (the amount calculated by applying the spouse's inheritance deduction amount to 1,027,195,962) from among the inheritance tax amount of 476,914,910 won paid by the plaintiffs.

4. Determination

A. Interpretation under Article 19(1) of the Inheritance Tax and Gift Tax Act

Under the premise that Article 19(1) and (2) of the Inheritance Tax and Gift Tax Act provides that, even if the inheritance is required to be registered, if the registration of ownership transfer according to the inherited portion is completed within the deadline, the spouse may receive the inheritance deduction. Thus, the Plaintiffs are claiming a return of unjust enrichment against the Defendant. As such, whether Article 19(1) and (2) of the Inheritance Tax and Gift Tax Act can be interpreted as alleged by the Plaintiffs.

Article 19 of the Inheritance Tax and Gift Tax Act explicitly provides that "only the case where the spouse divides (if it is necessary to register, register, transfer, etc.) the spouse's inherited property by the due date of division of the spouse's inherited property," and Article 19 of the Inheritance Tax and Gift Tax Act explicitly provides that "the amount actually inherited by the spouse may be deducted". ② Article 19 of the Inheritance Tax and Gift Tax Act does not cover the spouse's abstract statutory inherited property but requires the spouse to report that the division has been completed by the due date of the division or report on inevitable reasons that the spouse's actual inherited property has not been completed by the due date of the division, it is reasonable to hold that the spouse's actual inherited property should be deducted by the due date of the division of the inherited property after the spouse's inheritance deduction according to the abstract statutory inherited property is divided into shares of a non-spouse, and that the spouse's actual inherited property should not be deducted by the due date of the division of the inherited property." Article 19 (1) of the Inheritance Tax and Gift Tax Act provides that "the spouse's inheritance deduction is not verified by 10."

With respect to the instant case, there is no dispute that the Plaintiffs and B did not divide the inherited property through consultation and division before January 31, 2014, which is the time limit for the division of spouse’s inherited property. However, as seen earlier, each of the instant real estate, which is inherited property, was registered by inheritance in accordance with the legal inheritance under the name of the Plaintiffs and YB. As such, the Plaintiffs did not report the inheritance by division of inherited property until the time limit for the division of spouse’s inherited property ( there is no fact that the Plaintiffs reported to the head of Gangseo-dong Tax Office to the effect that it constitutes a case where it is impossible to divide the inherited property within the inherited property by the spouse’s division pursuant to Article 19(3) of the Inheritance Tax and Gift Tax Act). It is reasonable to deem that the spouse’s inheritance deduction pursuant to Article 19(4) of the Inheritance Tax and Gift Tax Act, such as the content of the instant disposition, can only

Therefore, the instant disposition based on the premise that the amount of inheritance deduction is KRW 500,000 is legitimate, and there is no other grave and apparent defect. Therefore, the Plaintiffs’ assertion is without merit without any need to further examine the remainder, such as the calculation of inheritance tax amount.

5. Conclusion

Therefore, the plaintiffs' claim is dismissed as it is without merit, and it is so decided as per Disposition.