Cho High Court Decision 201J 2545 (Law No. 18, 2012)

In the event that the title trust shares are not reported, an unfair under-reported penalty tax shall apply.

The reason why the stock in title trust is not reported as inherited property is that the property stipulated as one of the unfair methods is concealed, and it is legitimate to impose an unfair underreporting penalty tax on the stock evaluation value.

2012Guhap1984 Revocation of Disposition of Levying Inheritance Tax

KimAAA and three others

head of Sung Dong Tax Office

March 22, 2013

May 10, 2013

1. All of the plaintiffs' claims are dismissed.

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

On September 8, 2010, the part of the inheritance tax amount of KRW 000,00, which the Defendant provided against the Plaintiffs on September 8, 2010, is revoked (the Plaintiff stated in the complaint the amount of inheritance tax including penalty tax, but the final amount of inheritance tax remaining after the reduction or correction, as seen below, is KRW 000).

1. Details of the disposition;

A. On January 1, 2009, KimBB (hereinafter “the decedent”) died on January 1, 2009, Plaintiff KimCCC and his wife, Plaintiff KimAA, KimD, and KimE jointly inherited the decedent’s property.

B. On July 31, 2009, the Plaintiffs reported the value of the inherited property at KRW 000, including the value of the inherited property at KRW 000, and the value of the inherited property at KRW 000, and the inheritance tax base at KRW 000, and the inheritance tax amount at KRW 000, and the inheritance tax was not paid.

C.1) On April 23, 2010, the head of Seoul Regional Tax Office notified the Plaintiffs of the result of the tax investigation to add KRW 000 to the value of the inherited property, and to levy KRW 000 on the reported and paid-in-paid additional tax.

"2) The plaintiffs were dissatisfied with the notice of the tax investigation results, filed a request for a review of tax prior to the Seoul Regional Tax Office on August 13, 2010, and the Seoul Regional Tax Office rendered a partial decision to adopt part of the assessment on August 13, 2010. Accordingly, the defendant revoked ① Kim F, Kim HG, Kim H II, and Kim J (hereinafter collectively referred to as "KF")'s total stocks under title trust with the KK Development Co., Ltd. (hereinafter referred to as "KK Development") 3,000 (hereinafter referred to as "F: 1,000, Kim GG: 200, and 1,000, and 1,000, and 1,000, 300, and 500, and 1,000, 1,000,000,000,000,000,000,000,000,00,000,00,00.

2) According to the above decision, the Defendant issued a correction and notification of the inheritance tax amounting to KRW 000 (including penalty tax of KRW 000 and penalty tax of KRW 000 for failure to report, and penalty tax of KRW 000 for failure to report) by reducing the tax amount from KRW 000 to KRW 00.

E. 1) The Plaintiffs re-appealed to the Tax Tribunal on July 1, 2011, and the Tax Tribunal on April 18, 201, rendered a decision that the assessment of KRW 000 of the inheritance tax imposed on the Plaintiffs on September 8, 201 by the Defendant on September 8, 2011 that the assessment of KRW 000 of the inheritance tax was 00,000, Seongdong-gu Seoul OOOOOdong and KRW 1,31.3m2, the assessment of the assessed value of KRW 000,000 and KRW 00,000, and the remainder is dismissed.

2) According to the above decision, the Defendant issued a revised and notified the Plaintiffs of KRW 000 (including KRW 000,000, and KRW 000,00,00,00,00,00,000,00,000,00,000,000,00

(f) During the instant lawsuit, the Defendant corrected and notified the Plaintiffs of KRW 000 of inheritance tax (including penalty tax of KRW 000, and penalty tax of KRW 0000 on September 8, 2010 after the reduction thereof) by reducing from KRW 000 to KRW 000 of inheritance tax (including penalty tax of KRW 000,000 for failure to make a declaration, and penalty tax of KRW 000 for failure to make a payment) (hereinafter referred to as “instant disposition imposing inheritance tax on September 8, 2010”).

2. Whether the imposition of an unfair under-reported additional tax is illegal;

A. The plaintiffs' assertion

The plaintiffs did not report the above shares as inherited property because they knew of the fact that the decedent held title trust with 3,00 shares of K Development, etc., and did not know that the above shares are included in the inherited property. Therefore, under the premise that the plaintiffs did not report it despite being aware that the shares of 3,000 shares of K Development are included in the inherited property, and thus under the premise that the plaintiffs filed a tax base return in an unfair manner, the defendant is illegal to impose an unfair underreporting penalty tax (40%) on the plaintiffs by applying the unfair underreporting penalty tax rate (40%) on the assessed amount of 3,000 shares of K Development and the assessed amount of 3,000 shares of K Development and the assessment of the inheritance tax of this case.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) Of the total issued stocks of K Development 10,000, 6,000 shares of the decedent were owned by the decedent, and 1,000 shares of the decedent, the plaintiff KimCC, the wife of the decedent, and 3,000 shares remaining, the decedent, Kim Yong-G (1,00), the Kim GG (200), the siH (1,00), the siH (1,00), and the Kim JJ (500 shares), and the Kim J (500 shares). The KimF, and Kim J-H, were in a private relationship with the decedent, the wife of the decedent, while KimG, while the wife is the wife of Kim Kim Kim-F, and the wife is the wife of Kim H and Kim J, the decedent is the wife of Kim J.

2) The Plaintiff KimCC served as the auditor of K Development from November 10, 1998 to March 31, 2007, and from April 15, 2008 to July 9, 2010, after the decedent died, and was appointed as the representative director of K Development on July 9, 2010. The Plaintiff KimCC was appointed as the director from September 19, 197 to September 19, 200; from March 23, 2007 to March 23, 2007; from April 15, 2008 to April 15, 2011; from April 19, 2008 to July 9, 201, the Plaintiff KimCC was appointed as the director of K Development from March 19, 201 to 30, and from March 23, 2007 to 30, 209 to 19, 200.

3) The Plaintiff PortA received benefits from 1996 to 2002 from the K Development.

4) An O Housing Construction Co., Ltd. (hereinafter referred to as “O housing construction”) is KK Development’s subsidiary, and the Plaintiff KimCCC was employed as a director of O housing construction from March 23, 2001 to March 30, 201, after the decedent died, until March 30, 201, and Plaintiff SAA was employed as a director of O housing construction from June 10, 2002 to the date the decedent died. The Plaintiff SA was appointed as a representative director on June 9, 2008, when the decedent was employed as a director of O housing construction from June 10, 2008.

[Reasons for Recognition] The facts without dispute, the entries in the 2, 3, and 5 through 8, and the whole purport of the pleading

D. Determination

1) According to Articles 47-2(2) and 47-3(2)1 of the former Framework Act on National Taxes (amended by Act No. 911, Jan. 1, 2010; hereinafter the same shall apply), where there exists a tax base under-reported by improper means (referring to a taxpayer who violates the duty to report the tax base or amount of national tax on the basis of concealing or pretending all or part of the fact that serves as the basis for calculating the tax base or amount of national tax, and is determined by the Presidential Decree", the amount equivalent to the under-reported tax base shall be added to or subtracted from the tax amount payable by an amount equivalent to 40/100 of the amount calculated by multiplying the calculated tax base by the ratio occupied by the amount of tax to the amount of tax to be paid, and Article 27(2) of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 22038, Feb. 18, 2010; hereinafter the same shall apply) provides for double entry into the above method, fraudulent entry into account books and fraudulent or fraudulent evidence (Article 1(3).

2) In light of the above facts, the following circumstances are found to be known, i.e., 10,00 shares issued, 9,00 shares (i.e., 6,00 shares + 3,00 shares) were owned by the decedent, 1,00 shares were owned by the KimCC, and 3,00 shares were used by the decedent as a family company, such as the decedents, 1, and 3, and 1,000 shares were employed by the directors and auditors, and 2, 30, 30, 30, 30, 30, 30, 30, 30, 30, 30, 30, 30, 30, 30, 30, 30, 20, 30, 30, 20, 30, 30, 20, 30, 20, 3, 200, 3, 20, 3, 3,00, 3,0.

3. Conclusion

Then, the plaintiffs' claims of this case are all dismissed as it is without merit, and it is so decided as per Disposition.