Whether a real estate investment in kind in a cooperative association is subject to capital gains tax (affirmative)

Property invested by a partner in accordance with a partnership agreement shall constitute a partnership property separate from an investor's personal property and the investor's investment is in a waiting relationship with the status of the partner acquired by the investor. As such, an investment in kind in a partnership of a partner constitutes a "transfer" under the former part of Article 4 (3) of the Income Tax Act. Therefore, income accrued therefrom shall be subject to the transfer income tax.

Articles 703, 704, 4(1)3, and 23 of the Civil Act;

Plaintiff

The Head of the Maternization Tax Office

Seoul High Court Decision 83Gu898 delivered on May 1, 1984

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

(1) The association agreement in which two or more members of the association agree to operate a joint business by investing the property of the association separately from the personal property of the investors, and the investment is in the relationship between the status of the union members acquired by the investors and the absolute opinion. Thus, the real estate investment in kind to the association of the union members constitutes a "transfer" under the former part of Article 4 (3) of the Income Tax Act. Therefore, income accrued therefrom is subject to capital gains tax. (See Article 4 (1) 3 of the Income Tax Act) As the judgment of the court below became final and conclusive, the plaintiff evaluated 736 square meters of the building site of this case as 736 billion won from the non-party et al. at Won-si, and eight persons such as the non-party et al. including the non-party et al. by investing 25,00 million won in Do, and the non-party et al. made a new construction agreement with the union members of this case for the purpose of the transfer of the above housing site and its new construction agreement.

(2) Since the Plaintiff’s investment in kind in the above partnership is entirely separate from the Plaintiff’s investment in kind and the Plaintiff’s investment in kind engaged in the construction business of newly building and selling the apartment house on the above site, the said investment in kind may not be subject to double taxation by imposing a business income tax on newly building and selling the apartment house after imposing a transfer income tax on the said investment in kind. The judgment below to the same effect is just and there is no error of

(3) 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 on the bench.

Justices Kang Jin-young (Presiding Justice)