Whether the bonus disposal amount can be calculated by recognizing the cost of acquiring the business right not entered in the book

The total amount of the transfer proceeds disposed of outside the company shall be deemed to have been discharged out of the company, and shall be disposed of as bonus to the representative, and there is no evidence to acknowledge the acquisition cost of the above business right, and the claim that the acquisition cost should be deducted is without merit.

Article 67 of the Corporate Tax Act

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The defendant's rejection disposition against the plaintiff on September 11, 2006 shall be revoked.

1. Details of the disposition;

A. On October 28, 1994, the Plaintiff established ○○○○○○○-ro store on the 17th floor of the ○○ Building and store on the 30th floor of the 2nd floor of the 2nd floor (hereinafter referred to as “instant business site”) with the trade name of ○○○-ro, and opened ○○○○○ Sports Co., Ltd. (hereinafter referred to as “○○ Sports”) on the 24th day of June 1999, and thereafter assigned the said ○○ Sports Co., Ltd. (hereinafter referred to as “○○ Sports”) as its representative director, and thereafter transferred the said ○○ Sports Co., Ltd. (hereinafter referred to as “○○ Sports”).

B. The ○○ Sports Co., Ltd.: (a) entered into a real estate right transfer agreement with ○○○ on March 7, 2001 with ○○○; and (b) transferred the said right of lease and operating right to KRW 650 million (including KRW 16 million) to ○○ Sports Co., Ltd. on April 6, 2001; (c) was de facto closed on April 6, 2001 (the corporate registry is registered as being deemed dissolved pursuant to Article 520(2)1 of the Commercial Act on December 2, 2004). The ○○ Sports Co., Ltd omitted the above transfer price at the time of reporting and paying the tax base of value-added tax; and (d) paid all the above money to the Plaintiff without entering the details of acquisition of said right in the account book of ○○ Sports.

C. On June 1, 2006, the director of the ○○ Tax Office included KRW 634 million, which is the amount equivalent to the transfer cost of the instant business establishment, which was omitted as above, to the ○○ Sports (i.e., the transfer cost of KRW 650 million - the lease deposit of KRW 166,605,580, which is the corporate tax for the business year 2001; and (ii) corrected and imposed corporate tax of KRW 266,605,580, which is the corporate tax for the business year of 2001. On the other hand, the Plaintiff who is the representative, disposed of the said KRW 634 million as a bonus, and notified the Plaintiff of the change in the amount of income on June 7,

D. According to the bonus disposition, the Plaintiff filed a request for correction on July 31, 2006 on the ground that the assessment standard of global income tax for the year 2001 was revised to KRW 613,395,362, and the subsequent comprehensive income tax was paid, and on August 3, 2006, the Plaintiff filed a request for correction on the ground that the tax base and amount of global income tax for the Defendant reported for correction exceeds those to be reported under the tax laws.

E. However, on September 11, 2006, the Defendant rejected the claim for correction against the Plaintiff on the ground that the claim for correction was not subject to the claim for correction after three years from the original statutory due date of return (hereinafter “instant disposition”).

F. On October 17, 2006, the Plaintiff appealed to the Director of the National Tax Tribunal. On February 27, 2007, the Director of the National Tax Tribunal rejected the request for adjudgment on the grounds that the request for correction was groundless, although the time limit for request for correction was not too different.

[Reasons for Recognition] Facts without dispute, Gap evidence 1-3, Gap evidence 2-1 through 10, Gap evidence 3, Eul evidence 4-1 through 3, Eul evidence 2-2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) On June 30, 199, the Plaintiff was paid the above debt amounting to KRW 484 million, out of KRW 630,000,000,000,000,000,000,000,000,000 from ○○ Sports to ○○ Sports (i.e., the transfer price of KRW 584,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,0000,000,000,000,000,000,000,000,00,000).

Luxembourg Even if the Plaintiff did not consider that ○○○○ Sports had a claim equivalent to the above amount, the Plaintiff acquired the right to operate the instant business from ○○○○○○ on October 28, 1994 (i.e., KRW 140 million - lease deposit 16 million) (i.e., KRW 60 million) from ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ KRW 16 billion). As such, the Plaintiff’s right to operate the sports should be deemed to have been acquired from 360 billion + KRW 1750,500,0500.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) Where a corporation fails to record the transfer proceeds in its account book even if it transfers its assets, barring any special circumstance, the amount equivalent to the transfer proceeds not entered in the account book shall be deemed to have been leaked out of the company, and the legal entity claiming it shall prove that it is not leaked out of the company (see, e.g., Supreme Court Decision 2005Du2049, Dec. 21, 2006).

According to the ○○ Sports’s recognition, since ○○ Sports transferred the business right to the instant business establishment and paid all the transfer proceeds to the Plaintiff without entering it in the company’s account book, the total amount of the transfer proceeds not entered in the account book shall be deemed to have been leaked out of the company, and as long as the person to whom ○○ Sports was transferred is the representative director of ○○ Sports, it shall be deemed as a bonus to the Plaintiff.

As to whether the Plaintiff had a claim amounting to KRW 484 million against ○○ Sports, there is insufficient evidence to acknowledge the Plaintiff’s possession of only some of the records in the Health Team, Gap evidence Nos. 1-2, and Gap evidence Nos. 7, and there is no other evidence to acknowledge it (as seen earlier, there is no entry of the acquisition of the instant business establishment’s goodwill in the books of ○○ Sports, and ○○ Sports did not have any report on the acquisition of the instant business establishment’s goodwill at the initial time of filing a corporate tax return. According to the part of the evidence No. 7, the Plaintiff did not actually receive cash, etc. at the time of transferring the instant business establishment to ○○ Sports, and established ○○ Sports upon delegation by a certified tax accountant, the Plaintiff created ○ Sports by designating ○○ Sports as acquisition of KRW 500 million including business rights and lease deposits for the instant business establishment, and only prepared a real estate right transfer contract between ○○ and the transfer price).

Article 20 (1) 1 (c) of the Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006) provides that the amount deemed as bonus from the disposal of income is the full amount included in the calculation of earnings under the Corporate Tax Act. Thus, the Plaintiff’s assertion does not have the nature of deduction from the above earned income, and this part of the Plaintiff’s assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Related Acts and subordinate statutes

Corporate Tax Act (amended by Act No. 8831 of Dec. 31, 2007)

Article 67 (Disposition of Income)

In filing a report on the corporate tax base on the income for each business year under the provisions of Article 60 or in determining or revising the corporate tax base under the provisions of Article 66 or 69, the amount included in the calculation of earnings shall be disposed of as bonus, dividend, other outflow from the company, internal reserve, etc. according to the person to whom it reverts

Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 17457 of Dec. 31, 2001)

§ 106. Disposal of income

(1) The amount included in the calculation of earnings under the provisions of Article 67 of the Act shall be disposed of pursuant to the provisions of the following subparagraphs. The same shall also apply to non-profit domestic corporations

1. Where the amount included in the calculation of earnings has clearly leaked out of the company, the dividends, bonuses from the disposition of profits, other income, and other outflow from the company under each of the following items according to the person to whom they accrue: Provided, That where the accrual is unclear, it shall be deemed as accrual to the representative (where the total number of stocks issued by the relevant corporation is held by an officer who is not a minority shareholder under the provisions of Article 87 (2) and persons with a special relationship under the provisions of paragraph (4) of the same Article and the total number of stocks, etc. owned by such officer are in excess of 30/100 of the total number of stocks issued by the relevant corporation, the representative shall be the representative, and where a corporation has been exempted from withholding taxes under the provisions of Article 46 (12) of the Restriction of Special Taxation Act and there is a separate representative among the officers who are stockholders, etc., the reported person shall be the representative, and

(b) If the person to whom it belongs is an officer or employee, the bonus to the person to whom it reverts;

2. Where the amount included in gross income has not leaked out of the company, it shall be deemed internal reserves;

Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006)

Article 20 (Earned Income)

(1) Earned income shall be the following income generated in the relevant year:

1. Class A:

(c) Amount treated as a bonus under the Corporate Tax Act; and