early 2010 Heavy1940 ( October 24, 2010)

In order to reduce capital gains tax due to farmland substitute land, the previous land should be 'direct cultivation' at the time of the transfer of the previous land.

In order to reduce capital gains tax due to the substitute land for farmland, it is reasonable to consider that the previous land at the time of the transfer should be ‘direct cultivation', and it cannot be interpreted that the previous land at the time of the transfer is included in ‘large land for farmland as required for cultivation' if the previous land was not cultivated for more than three years in total.

Chuncheon District Court Decision 2010Guhap871 Revocation of Disposition of Imposing capital gains tax

김〇〇

〇〇세무서장

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 39,714,870 for the Plaintiff on December 1, 2009 shall be revoked.

1. Details of the disposition;

가. 원고는 1989. 3. 17. 〇〇시 〇〇동 237 전 1,884㎡(이하 '이 사건 토지'라 한다) 를 취득하였다.

On November 15, 2007, the Plaintiff transferred the instant land to the Korea National Housing Corporation in KRW 224,007,60,000, and thereafter acquired the same 401-1,950 square meters prior to 370 square meters prior to September 23, 2008, Dog-ri, Mari-ri, Mari-ri, Mari-ri, Mari-si, Mari-si, Mari-si, Mari-ri, Ma

B. On January 31, 2008, the Plaintiff filed an application for reduction or exemption of capital gains tax by asserting that selling the instant land to the Korea National Housing Corporation and purchasing each of the said land in △△ City was farmland substitute land, upon reporting the transfer value of KRW 224,07,60, and acquisition value of KRW 25,850,000.

On December 1, 2009, the Defendant issued a disposition imposing capital gains tax of KRW 39,714,970 to the Plaintiff for the year 2007 on the ground that the Plaintiff did not own the land at the time of the transfer of the instant land and did not constitute reduction or exemption of capital gains tax on the ground of farmland substitute land (hereinafter “instant disposition”).

C. The Plaintiff appealed and filed an objection on February 26, 2010 with the Tax Tribunal on June 15, 2010, but the claim was dismissed on August 24, 2010.

[Reasons for Recognition] Evidence No. 1, 2, Evidence No. 1, 2, and 3 of Evidence No. 1, 2, and 1

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff: (a) acquired the instant land from March 17, 1989 to engage in agriculture and neglected it until the time of 2002; (b) however, when the instant land was damaged due to typhoons caused on August 31, 2002 due to typhoons, which occurred on August 31, 2002, the restoration work is required; and (c) upon request from the least AA to recover the instant land and by proxy cultivation, the Plaintiff cultivated the instant land until December 2007; and (d) the term “large land due to the necessity for cultivation” under Article 70(1) of the Restriction of Special Taxation Act is a concept that covers the disposal of the land possessed by a person engaged in agriculture and the acquisition of new farmland for the purpose of farming, and it does not necessarily be limited to the case where the former land was insignificant at the time of transfer of the previous land.

The Plaintiff’s disposition issued on the ground that the Plaintiff did not own the instant land at the time of the transfer of the instant land was unlawful, and thus, should be revoked on the ground that the Plaintiff’s transfer of the instant land constitutes reduction of capital gains tax, even if the Plaintiff satisfied all requirements, such as cutting down the instant land for at least three years in total while living in the

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

The Plaintiff, from around April 1991, 199 to December 2007, she: (a) leased the instant land to LA from April 1999 to LA; and (b) the LA cultivated the instant land, giving and receiving houses, etc. from the instant land (Evidence B).

Article 70(1) of the Restriction of Special Taxation Act and Article 67 of the Enforcement Decree of the Restriction of Special Taxation Act provide that capital gains tax shall not be imposed on the substitute farmland for the purpose of protecting farmers by allowing and guaranteeing free substitution of farmland and promoting the development and encouragement of agriculture. In light of the fact that the acquisition and sale of farmland after the acquisition of farmland should be limited to the cases where the farmland, which was owned by the self-employed farmer, is for the purpose of substitute farmland for cultivation (see, e.g., Supreme Court Decisions 2002Du5924, Sept. 5, 2003; 95Nu3695, Sept. 29, 195; 91Nu1806, May 24, 191). Thus, in order to reduce capital gains tax due to substitute farmland pursuant to the above provisions, it is reasonable to view that "direct cultivation of the previous land at the time of transfer" should be included in the provision of this case where the Plaintiff had no direct cultivation at the time of transfer for three or more years prior to the transfer.

3. Conclusion

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