Whether income from the transfer of land in this case is not capital gains but business income.

Whether the income from the transfer of real estate is business income or capital gains under the Income Tax Act shall be determined according to social norms, considering whether the transferor acquires and holds real estate, whether the transfer is made, the scale and frequency of the transfer, how the transfer is made, whether the transfer is for profit-making purposes, and whether the degree of continuity and repetition that can be seen as business activities, etc.

2014 old-gu 766 Capital Gains Tax Imposition Disposition

AA

BB Director of the Tax Office

2015.05.15

15.08.21

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 118,113,830 for the Plaintiff on February 5, 2013 is revoked.

1. Details of the disposition;

A. On January 15, 2002, the Plaintiff: (a) completed each registration of ownership transfer with respect to ○○○○○○○○○, 334 square meters (hereinafter “1 land”) and 315 square meters per annum 315, 760 square meters per annum (hereinafter “2 land”); (b) on September 3, 2002, on March 26, 2002, on May 31, 2003, the Plaintiff reported the transfer of 2 land to static; and (c) on May 31, 2003, the Plaintiff reported the transfer of 1 land with respect to 138,000,000, 2 land to 13,000,000, 151,000,000 won in total; and (d) on the transfer value of 10,000,000 won in total, 205,000 won in total; and

B. Accordingly, the Defendant, following the on-site investigation, found the transfer value of the land 1 to be KRW 384,631,00 for the land 2, KRW 30,000 for the land 30,000 for the land 2, KRW 414,631,00 for the land 41,00 for the aggregate, and KRW 297,00,000 for the land 1 and KRW 297,000 for the land 202 for the land 9,46,230 for the capital gains tax of KRW 202 for the land 200 for bothCC, and revoked the above disposition of capital gains tax for bothCC on February 5, 2013 for the Plaintiff to be subject to imposition and notification of capital gains tax of KRW 118,113,830 for the capital gains tax of February 5, 2013.

C. The Plaintiff filed a request for adjudication with the Tax Tribunal, but was dismissed on February 13, 2014.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) The Plaintiff did not have held title trust with bothCC, and the twoCC actually transferred the land Nos. 1 and 2 after it acquired the land of this case.

2) Even if the Plaintiff acquired and transferred the instant land Nos. 1 and 2 to YangCC by title trust, the exclusion period for exclusion is up to May 31, 2010, which is seven years, since the Plaintiff did not submit a tax base return, and thus, the instant disposition is null and void by imposing the exclusion period for taxation.

3) Even if the Plaintiff acquired and transferred the instant land Nos. 1 and 2 in title trust to YangCC in substance, the Plaintiff purchased five parcels of land in 2002 and sold four parcels of land in the same year and sold the remaining one parcel of land in 2003. According to Article 2(2)2 of the Enforcement Rule of the Value-Added Tax Act, in a case where the Plaintiff acquired real estate more than once during one taxable period and sold more than two times, it shall be deemed as real estate sales business. Thus, the Plaintiff’s transfer of the instant land with continuity and repetition to the extent that the Plaintiff can be seen as business activities under the social norms. As such, the income from the transfer of the instant land Nos. 1 and 2 constitutes business income, not capital gains.

4) In transferring the instant land Nos. 1 and 2, the sales commission and real estate consulting cost of KRW 46,729,000 shall be deducted as necessary expenses, as the sales commission and real estate consulting cost were to be paid.

B. Determination

1) Whether title trust is held

In full view of the overall purport of the statements and arguments in Eul evidence Nos. 2, 4, 5, 6, and Eul evidence Nos. 3-1, 2-1, and 3-2, 90,000 won out of the collateral security debt 112,00,000, which was established with respect to the land Nos. 1, 2 of this case, was repaid from the plaintiff's account, and the remainder was paid out of KRW 175,00,000 from KimGG, the wife, the wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's wife's bank's

2) Whether the exclusion period has expired or not

According to the above facts, while title trust of the land Nos. 1 and 2, the Plaintiff reported to the Negation YangCC that there was no capital gains tax to be paid to the tax authorities as if they actually acquired and transferred the land. Such a series of acts are not merely a report or under-report but a tax authorities made it impossible or considerably difficult for the tax authorities to impose and collect the capital gains tax on the Plaintiff on the transfer of the land of this case by providing that the tax authorities misleads the actual owner of the land of this case and the person to whom the capital gains tax on the transfer of this case belongs, thereby making it impossible or considerably difficult for the tax authorities to impose and collect the capital gains tax on the Plaintiff. Therefore, the exclusion period of imposition of the capital gains tax on the transfer of this case shall be ten years. The disposition of this case was made within ten years from June 1, 2003, which was the initial date of exclusion period of imposition, and thus is legitimate.

3) Whether it is business income

(2) The determination of whether the Plaintiff acquired real estate income or transfer income under the Income Tax Act through the transfer of the real estate under the name of the transferor, whether the transfer income was made, the scale and frequency of transfer, the other party, etc. shall be based on ordinary social norms, taking into account not only the transfer of the real estate concerned but also the overall circumstances surrounding the transfer of the real estate owned by the transferor before and after the lapse of 0 years, including the transfer of the real estate under the name of the transferor. The Plaintiff’s transfer of the real estate after the lapse of 0 years after the transfer of the real estate to 30 years after the transfer of the real estate, and the Plaintiff’s transfer of the real estate after the lapse of 0 years after the transfer of the real estate to 10 years after the transfer of the real estate to 30 years after the transfer of the real estate under the name of the transferor. The Plaintiff’s transfer of the real estate to 30 years after the sale of the real estate after the lapse of 20 years after the transfer of the real estate under the name of the title trustee.

4) Whether necessary expenses are deducted

The testimony of witness alone is insufficient to recognize that he paid 46,729,000 won as brokerage commission and real estate consulting cost while transferring the land Nos. 1 and 2 of this case as asserted by the plaintiff, and there is no other evidence to prove otherwise.

3. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.