early 201 Mine001 (Law No. 1102.01)

The acquisition value of the Gu building shall not be included in necessary expenses.

When it is deemed that the acquisition of land and a building is clearly deemed to have been aimed at utilizing only the land by removing the land from the beginning, the acquisition value, removal costs, etc. of the removed building may be included in the necessary expenses of the transferred asset included in the acquisition value of the land, but the building of this case does not fall under such cases as the use of clothing retail stores, etc. for about three years

2011Guhap153 Revocation of Disposition of Imposing capital gains tax

Park XX

O Head of tax office

July 14, 2011

August 11, 2011

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 13,987,930 for the Plaintiff on September 1, 2010, revoked part of KRW 9,559,670 for the imposition of capital gains tax of KRW 13,987,930.

1. Details of the disposition;

O Acquisition of real estate by the plaintiff

- Acquisition on April 29, 199: Jeonnam City, XX 00 east 403 m2,000 m2 (hereinafter referred to as the “instant land”) and its ground buildings (hereinafter referred to as the “former building”) (the Plaintiff’s share 4/5, joint buyers’ share 1/5)

- On November 12, 2003: Fire rooms of 330 square meters in the previous building of this case

- On July 19, 2004: A newly constructed a building (1st floor 306.39 square meters, 2nd floor 335.49 square meters, hereinafter referred to as "new building of this case") on the instant land and completed a registration of preservation of ownership (4/5 of the Plaintiff's shares, 1/5 of the 1st 2nd 306.39 square meters, 2nd

O) Transfer of the Plaintiff’s real estate and reporting and payment of capital gains tax

- On February 14, 2007: the transfer of the instant land and new buildings to KimB in KRW 2 billion;

- Report and payment of capital gains tax of KRW 658,090 to the Defendant: The transfer value shall be 1.6 billion

The amount of KRW 1,582,751,00 converted into the standard market price on the grounds that the actual transaction price cannot be confirmed (the amount equivalent to KRW 4/5 of the Plaintiff’s share out of the total transfer value of KRW 2 billion), and the acquisition price shall be reported as KRW 1

O Correction and Notification of the Defendant (Disposition of this case)

- On-site investigation by the Defendant: Verification that the actual acquisition value of the instant land and building acquired from thisCC is KRW 1,486,00,000;

- The acquisition value equivalent to 4/5 of the Plaintiff’s share among the instant land and new buildings and the recognition of necessary expenses

① The acquisition value of the instant land: 1,188,80,000 won (=1,486,00,000 won x 4/5 of the Plaintiff’s share) calculated based on the ratio of the standard market price on April 29, 1999 (2,176,200,000 won for the instant land and building, and 68,098,117 won for the instant building): 1,152,728,000 won calculated based on the actual acquisition value of the instant land and building.

② The acquisition value of the new building of this case: the above 1,582,751,00 won, which is the conversion value initially reported by the Plaintiff, which corresponds to 223,312,00 won.

(3) The introduction fee of 100 million won, etc. shall be deemed necessary expenses.

- With respect to the plaintiff on September 1, 2010: 13,897,930 won for the transfer income tax of 2007

O Details of the instant lawsuit

- On November 1, 2010: The defendant raised an objection by inserting an amount equivalent to KRW 36,072,00,000, which is the acquisition value of the building of this case destroyed by fire (i.e., KRW 1,188,80,000- 1,152,728,00) in necessary expenses.

- November 23, 2010: Dismissal of an objection

- On December 13, 2010: Request for a trial against a decision to dismiss the defendant's above dismissal to the Tax Tribunal;

- February 1, 2011: Dismissal of an appeal

- On March 30, 2011: the filing of the instant lawsuit

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 6, Eul evidence No. 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion and the issues of this case

The Plaintiff asserts that the disposition of this case, which was not included in necessary expenses, is unlawful since the acquisition value of the building of this case destroyed by fire, constitutes necessary expenses for the original purpose of the land of this case, or the capital expenses for the original purpose of the pertinent property due to the destruction or damage of the building.

Therefore, the issue of this case is whether the issue amount corresponds to the necessary expenses in calculating the transfer income amount of the land and the new building in this case.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) The transfer income amount is calculated by dividing into land and buildings (see Articles 102(1) and 94(1) of the Income Tax Act). Ultimately, whether the key amount falls under the necessary expenses in calculating the transfer income amount of the instant land and the new building is divided into ① whether the key amount may be deemed necessary expenses for the instant land (in relation to this part, the Plaintiff claims that the key amount is necessary expenses for the use of the instant land for its original purpose) and ② whether the necessary expenses for the instant new building may be deemed necessary (in relation to this part, the Plaintiff claims that the key amount falls under the capital expenses for the use of the instant land for its original purpose due to the destruction or damage of the relevant building).

(2) Whether the key issue amount can be deemed as necessary expenses for the instant land

(A) According to Article 97 (1) of the former Income Tax Act (amended by Act No. 8852 of Feb. 29, 2008), in principle, necessary expenses to be deducted from the transfer value of land are the corresponding acquisition value related to the corresponding land, so the acquisition value of a separate building on land does not, in principle, constitute necessary expenses to be deducted from the transfer value of land.

(B) However, in exceptional cases where the acquisition of land and a building is for the use of only the land, the acquisition value of the building may be deemed necessary expenses to be deducted from the transfer value of the land, if there are special circumstances such as the case

In other words, in a case where a building is demolished in order to use the land and its ground building together after the acquisition of the building, and only the land is transferred in the state of the site, such as the commencement of the removal of the building within a short time after the acquisition, etc., if it is deemed that the acquisition of the land and the building is obviously aimed at utilizing only the land by removing the building from the beginning to the beginning, the acquisition value and the removal cost of the removed building may be included in the necessary expenses of the transferred property included in the acquisition value of the land (see Supreme Court Decision 92Nu7399, Sept.

(C) However, according to the evidence as seen earlier, the Plaintiff may recognize the fact that the instant building was used as clothing retail stores, etc. for about 3 years after the Plaintiff acquired the instant land and the instant building and before the fire, and in light of such fact, the Plaintiff did not acquire the instant building en bloc for the purpose of using only the instant land from the beginning to the beginning, and there is no other circumstance to prove that the purpose of acquiring the instant building is apparent.

(D) Therefore, the key issue, which is the acquisition value of the building of this case, cannot be deemed as necessary expenses to be deducted from the transfer value of the land of this case. The plaintiff's assertion on this part is without merit

(3) Whether the issue amount can be deemed necessary expenses for the instant new building

(가) 앞서 본 증거들에 의하면, 원고는 양도소득세 신고시 신축한 이 사건 신건물의 실지취득가액을 확인할 수 없다는 이유로 기준시가에 의한 환산취득가액을 신고하였고, 이에 따라 피고도 이 사건 신건물에 관한 양도소득의 필요경비를 구 소득세법 (2008. 2. 29. 법률 제8852호로 개정되기 전의 것) 제97조 제3항 제2호, 제1항 제1호 나목, 구 소득세법 시행령(2008. 2. 22. 대통령령 제20618호로 개정되기 전의 것) 제 163조 제6항 제2호, 제12항, 제176조의2 제2항 제2호에 따라 개산공제(漸算控除) 방식으로 계산한 사실을 인정할 수 있는바, 이러한 경우에는 납세의무자가 그 이외에 실지로 소요된 필요경비를 입증한다 하더라도 이를 필요경비로 양도가액에서 공제할 수 없다.

(B) Therefore, regardless of whether the issue amount falls under the capital expenditure for the use of the original purpose of the relevant assets as alleged in the Plaintiff’s assertion, it cannot be deducted from the transfer value of the new building in question as necessary expenses, regardless of whether it constitutes the capital expenditure for the use of the relevant assets as its original purpose as its loss or damage (Naa, capital expenditure under the Income Tax Act refers to the repair cost disbursed to extend the lifespan of depreciable assets owned by the relevant business operator or to increase the real value of the relevant assets in reality, and among them, it includes the expenditure for the restoration of the relevant assets that have no usefulness for the relevant assets due to a disaster, etc. (see Article 67(2)4 of the Enforcement Decree of the Income Tax Act). However, if such capital expenditure falls under the necessary expenses to be deducted from the transfer value of the relevant assets, it shall be deemed that the relevant building was restored after the expenses for recovery were paid, but in this case, it shall not be deemed that the instant new building was destroyed or lost, nor shall the subject of transfer be deemed the capital expenditure of the Plaintiff’s assertion on this part.

3. Conclusion

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