Method of calculating transfer margin under the former Income Tax Act

The provisions of Articles 23(4) and 45(1)1 of the former Income Tax Act (Act No. 3576, Dec. 21, 1982); and the amended provisions of Article 170(4)3 of the Enforcement Decree of the same Act (Presidential Decree No. 10977, Dec. 31, 1982) shall be calculated on the basis of the standard market price in the case of transfer of assets. In the case of transfer of assets, where assets are transferred and evidential documents are submitted to confirm the actual transaction price in making the preliminary return of transfer margin or the final return of tax base, the transfer margin shall be calculated on the basis of the actual transfer and acquisition price. Even if the actual transaction price is confirmed after the expiration of the period for final return of tax base, the transfer margin shall be calculated on the basis of the standard market price.

Articles 23(4) and 45(1)1 of the former Income Tax Act (Act No. 3576 of Dec. 21, 1982), Article 170(4)3 of the former Enforcement Decree of the Income Tax Act (Presidential Decree No. 10977 of Dec. 31, 1982)

Supreme Court Decision 85Nu847 decided Mar. 11, 1986; 86Nu86 decided Oct. 14, 1986; 86Nu287 decided Feb. 10, 1987; 87Nu305 decided Jun. 23, 1987 (Dong)

Plaintiff

Head of Ulsan District Office

Daegu High Court Decision 85Gu284 delivered on April 16, 1986

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

According to Articles 23(4) and 45(1)1 of the Income Tax Act (amended by Act No. 3576, Dec. 21, 1982), the transfer value and acquisition value, which form the basis of gains on transfer of assets, shall be based on the standard market price in principle, and only exceptional cases prescribed by the Presidential Decree, shall be based on the actual market price. Article 170(4)3 of the Enforcement Decree of the same Act (amended by the Presidential Decree No. 10977, Dec. 31, 1982) provides that "Where the transferor can confirm the actual market price at the time of acquisition or transfer by documentary evidence submitted by the declaration pursuant to Article 95 or 100 of the Act, "the actual market price at the time of transfer" is one of the cases where the transfer of assets differently from the previous provisions, and even if transfer gains are transferred, the transfer value or final return on transfer of assets can not be confirmed by the standard market price at the time of transfer declaration or the final return on transfer, it shall be determined by 187.187.

According to the reasoning of the judgment below, the court below determined that the plaintiff acquired one house on February 2, 1967 and demolished the above house and constructed the building of this case around 1969, but did not make a final return on the profits accruing from the transfer of the land and the building of this case under Article 95 of the Income Tax Act or the final return on the tax base under Article 100 of the same Act even though the land and the building of this case were transferred to the non-party at an auction, and that the transfer price and the acquisition price for calculating the gains accruing from the transfer of the real estate of this case should be based on the standard market price under the Local Tax Act, which is the standard market price, under Articles 60 and 45 (1) of the same Act and Article 115 (1) (b) of the Enforcement Decree of the same Act, and rejected the judgment below's assertion that the acquisition price of the building of this case, such as the theory of lawsuit, constitutes an improvement expense under Article 45 (1) 2 of the same Act, but rather falls under the acquisition price of this case or its actual market price.

Therefore, the appeal is 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.

Justices Choi Jae-ho (Presiding Justice)