Early High Court Decision 2008J 4141 (Law No. 205, 2009)

Donation of stocks at the price of stock due to acquisition by transfer

Although it is alleged that the gift tax due to low-price acquisition of shares is a title trust shares, it is difficult to believe only the evidence submitted.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The Defendant’s disposition of imposition of KRW 283,071,60 on September 2, 2008 against the Plaintiff was revoked.

1. Circumstances of the disposition;

A. On August 10, 2003, the Plaintiff obtained a change of ownership of KRW 60,500 per share (hereinafter referred to as “instant shares”) from KimA, a shareholder of △△△, a △△, a stock company prior to △△△△, a company (hereinafter referred to as “△△△,”) to a 60,00 shares owned by the Plaintiff, from the △△, a shareholder of the △△△△, a company prior to △△△, a company (hereinafter referred to as “△△△,”).

B. On September 8, 2008, the Defendant calculated the value per share as KRW 17,733 on the ground that the stock transaction of this case constitutes acquisition of property from a person with a special relationship at a lower price than the market price, and imposed a disposition of KRW 283,071,60 on the Plaintiff on September 8, 2008 (hereinafter “instant disposition”).

C. On November 28, 2008, the Plaintiff filed an appeal with the Tax Tribunal seeking the revocation of the instant disposition, which was dismissed on May 20, 2009.

2. Whether the disposition of this case is legitimate

A. The plaintiff's principal

1) The instant stock transaction did not actually take over the instant shares from KimB, who was the actual owner of the said shares, but again title trusted by his wife KimB to the Plaintiff to avoid the demand for joint and several guarantee from financial institutions.

2) Even if the Plaintiff actually acquired the instant shares, the said shares were traded at KRW 1,500 per share in a number of transactions including the instant shares transaction, and thus, it is unlawful to dispose of the instant shares by applying the provision on donation of low-price transfer, even though the said shares should be deemed the market price.

(b) Related statutes;

Attached Form is as shown in the attached Form.

(c) Fact of recognition;

1) On November 2001, KimB, who was the representative director of △△△△ Group, was transferred 200,000 shares from △△△△△ Group, and around December 2001, transferred 13,50 shares out of 200,000 shares to the Plaintiff. In addition, around December 2001, this 120 shares were transferred to the Plaintiff.

2) At the time of October 2002, the Plaintiff: (a) transferred 4,500 shares from ParkD, which was the representative director of △△△△○○, and held 18,00 shares of shares and 13,500 shares of shares that were received from KimB prior to the transfer; and (b) became the representative director of △△△△△△ on October 18, 2002.

3) In December 2002, KimB transferred 60,000 shares remaining after 80,000 shares to KimA, and 20,000 shares to E, a fraud, and this CC, a management director of △△ Group Co., Ltd., which was holding 60,00 shares at the time, transferred 30,00 shares to KimF and GG.

4) On August 10, 2003, KimB transferred the above 60,00 shares to the Plaintiff on August 10, 2003 (i.e., the Plaintiff was holding 78,00 shares in total, including 18,00 shares previously owned). EE transferred 20,00 shares to the High HH, and KimF and GG forms to the highest II, 20,00 shares to the 10,00 shares, 5,00 shares, respectively, to the KJ, KimM, and KimN, and the sale price of the above shares was 1,50 won per share.

5) On the other hand, seven persons, such as high-H, lowest II, LgingJ, lowest K, KimL, KimM, and KimN, have paid all gift taxes imposed after recognizing the low price of stocks at the time of the investigation by △△ regional tax office.

[Reasons for Recognition] Facts without dispute, Gap evidence 3-1, Eul evidence 2-6, 7, Eul evidence 7-1 through 7, the purport of the whole pleadings

D. Determination

1) First of all, we examine whether the stock transaction in this case is a title trust other than the actual transfer, and the each statement in subparagraph 2-2 through 6-2 of the evidence No. 2, which seems consistent with this, was made after August 10, 2003, which is the date of the instant stock transaction, and it is difficult to believe that the stock transaction in this case is a hole trust. The statement in the evidence No. 2-1, alone, is insufficient to recognize that the stock transaction in this case is a hole trust, and there is no other evidence to acknowledge this. Rather, seven persons, such as HH, etc., to whom shares were transferred as the Plaintiff on the date of the instant stock transaction, have paid all gift tax imposed after recognizing the low price of shares at the time of the tax investigation by the tax office. In light of the fact that when the Plaintiff filed a request with the Tax Tribunal for a review with the Tax Tribunal, it is reasonable to deem that the Plaintiff actually purchased the stocks in this case from the Plaintiff in this lawsuit.

2) Furthermore, examining whether the instant stock transaction constitutes a low-price transfer, and adding the purport of the entire pleadings to each of the items listed in subparagraph 3 and subparagraph 5 of subparagraph 5, the issuance price per share of 200,000 won 5,000 won (x5,000 won per share) is 1,00 won in capital, and 200,000 won in the business year 200,000 won where the instant stock transaction date belongs to 1,510,000 won, and 1,710,000 won per share of 3,000,000 won per share of 7,000,000 won per share of 9,000 won per share of 7,000,000 won per share of 7,000,000 won per share of 3,000,000 won per share of 1,71,000,000 won per share of stocks.

3) Therefore, the instant stock transaction constitutes a case where the Plaintiff acquires assets from the KimA having a special relation at a price lower than the market price. The instant disposition is lawful in deeming the Plaintiff to have received the difference between the market price and the transaction price of the instant stocks from KimA by calculating the value per share as KRW 17,733 by the supplementary evaluation method.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.