The appraised value of registered cultural heritage, such as a so-called Japanese occupation and flaps, transferred along with the land, shall be equivalent to the transfer value of the transfer income tax.

The appraised value is included in the transfer value of the land, because it is difficult to evaluate the actual excavation of land and so on into the Republic of Korea as an independent object from the land, the appraised value is also included in the transfer value of the land, and the price for the transfer of trees and obstacles to the partial transfer land is also subject to transfer income tax, and the amount equivalent to the subsidy paid to the tourist business corporation operating the same excavation is not considered as necessary expenses from the transfer value

Article 94 of the Income Tax Act (Scope of Transfer Income)

District Court-2016-Gu Partnership-5201 ( November 08, 2016)

A A and 2

○ Head of tax office

- 2017.05.10

2017.12

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

The imposition of KRW 17,498,130, KRW 2,837,570, KRW 214,846,130, and KRW 2,050, KRW 20133, KRW 214,846,130, and KRW 2,051,850, and KRW 51,383,810, and KRW 4,606,150, and KRW 208,670 for Plaintiff AB on December 2, 2013 is revoked, respectively.

1. Details of the disposition;

(a) Details of the sale and purchase of land;

1) On October 14, 2003, the Plaintiffs (Plaintiff BB, Plaintiff CCC’s spouse, Plaintiff CCC’s ASEAN’s AA’s son) and Plaintiff AA purchased DDR’s land outside of ○○○○○○○○○○, ○○○○, etc. (hereinafter referred to as “DDD”) (where part of the above land is named, hereinafter referred to as “○○○○○, etc.”).

2) Since then, it was conducted to discover and restore the Jindong Excavation in the Japanese military located under each of the above lands based on DDD, and around February 2004, the Peace Museum ( composed of a total of six buildings and their accessory facilities) was opened on the ground of some of the above lands (○○○ Ri 1166 and 847 land) on the ground, which was open to the general public for a fee. The above Jindongdong Mining (hereinafter referred to as the "O○D Japanese volunteer mining") was registered as cultural heritage at the Cultural Heritage Administration on December 14, 2006 (hereinafter referred to as the "Jindong Mining").

3) The ○○○ Special Self-Governing Province granted subsidies of KRW 120,00,00 each on June 30, 2009 and October 1, 201 of the same year, under the name of a project for the improvement of dynamic excavation, such as excavation, reinforcement, etc. of land damaged after aging. ② On December 29, 2010, each of the subsidies of KRW 193,000,000 was paid on March 2, 2011, under the name of a project for the improvement of dynamic-dong excavation, such as road maintenance, and each of the subsidies of KRW 120,000 was provided on March 30, 201 and KRW 195,00,000 on June 30, 201, and KRW 9,717,143 on September 9, 201 and each of the subsidies was provided on a half of each of the subsidies (hereinafter referred to as “the subsidies”).

4) The plaintiffs and DD sold 171 28,416 m2 and 4 lots of land (hereinafter referred to as "land of this case") on the aggregate of 3,147,372,000 won on December 27, 2012 and March 19, 2013, and 3,147,37,372,000 won on the land of this case (hereinafter referred to as "Management Office"), and the aggregate of 171,417,416 m2, and 28,416 m2, and 400 m2,000 m2,000 m3,000 m2,000 m27,000 m2, 170,708,70,700 m26,000 m2,07,000 won of the land of this case.

The appraisal results were calculated based on the results of the appraisal conducted. (1) Of these, the value was assessed based on the rate of appraisal conducted on the land located in ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ KRW 58% of the total so-called “the total so-called ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○”).

(b) Details of reporting and imposing capital gains tax;

1) The Plaintiffs voluntarily paid the transfer income tax calculated on the basis of only the remaining 531,258,895 won, excluding the shares of DD, from the transfer value of the instant land.

2) In addition to the value determined on the instant land itself, the Defendant calculated capital gains tax and special tax on December 2, 2013 by deeming that the transfer value of the land on the ground except for the ○○ Ri 1171 land was subject to taxation, and the value of the surface trees on the ground was excluded from taxation, and the value of the mine facilities was also excluded from taxation subject) as well as the value determined on the instant land, as well as the transfer value under Article 94(1)1 and 4 of the former Income Tax Act (wholly amended by Act No. 12852, Dec. 23, 2014; hereinafter referred to as the “former Income Tax Act”), the Defendant: (a) assessed capital gains tax and special tax on December 2, 2013 on the basis that the amount stated in attached Forms 2 through 3 were subject to taxation; and (b) the Plaintiffs filed a claim against the Plaintiffs for revocation of each of the instant disposition on April 21, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 3, 7 through 18 (including evidence of provisional number; hereinafter the same shall apply), Eul evidence 1 through 9, and the purport of whole pleadings

2. The plaintiff's assertion

(a) Matters concerning imposition of capital gains tax;

1) The so-called so-called Jin-dong Excavation is treated as a separate object from the instant land under relevant laws, such as the Income Tax Act, and is distinguishable from the purchase price of the land, such as land being interpreted as compensation not the purchase price, in the case of reversion of property to the National Treasury, and in the actual process of transfer, it was evaluated separately from the instant land and the compensation was made. Considering such circumstances, given that the amount set at the price of Jin-dong Excavation between the parties at the time of transfer of Jin-dong Excavation, etc. was received and received irrespective of the

2) The appraised value of registered cultural heritage is, regardless of its commercial use, to verify the unique value of the articles to be preserved and used as cultural heritage, and it cannot be deemed that it is subject to business rights as an intangible asset having economic value by combining human and physical assets. Therefore, the cost of transfer does not constitute subject to capital gains tax.

3) Since obstacles and trees on the ground of the instant land are transacted separately from the instant land, they cannot be subject to capital gains tax.

B. Determination of capital gains tax amount

1) Even if the transfer price of Jindong Capital is subject to capital gains tax, Korea recovered the amount equivalent to the National Treasury out of the instant subsidies paid under the name of Jindong Capital’s remuneration in relation to the transfer price of land 1171. The Republic of Korea’s above measure is merely a collection of subsidies not received from Jindong Capital but paid not from Jindong Capital’s transfer price, and as such, the amount equivalent to the subsidies recovered is excluded from the transfer price.

2) The subsidies collected by the Republic of Korea and the ○○ Special Self-Governing Province in relation to the transfer of advanced diggings, etc. are expenses incurred in improving or using transferred assets and are of the nature of expenses that may inevitably arise in connection with the transfer of cultural properties. Therefore, this constitutes capital expenses or transfer expenses, which are necessary expenses that should be deducted from the transfer value when calculating gains on transfer under the Income Tax Act

3. Whether the instant disposition is lawful

(a) Relevant statutes;

Attached Form 4 shall be as listed in attached Table 4.

B. Determination

1) Whether the object of taxation is included in the amount equivalent to the value of the advanced excavation

A) Article 94(1)1 of the former Income Tax Act provides that a building included in the scope of small income shall include the facilities and structures attached thereto in the scope of the building, thereby also include the value corresponding to the relevant structure, etc. in the transfer amount of the building.

This can be seen equally in the case of land. For example, in a case where it is deemed that the parties to the transaction have lost the object of independent right because it is almost little economic value if it is impossible to separate the land from the land because it is actually combined with the land, or if it is separated from the land, barring special circumstances, barring any special circumstance, the transfer price of the structure is subject to capital gains tax under the former part of Article 94(1)1 of the former Income Tax Act, which is included in the transfer income of the land (see Supreme Court Decision 2011Du23016, Oct. 29, 2015). (B) In light of the above legal principles, even though the parties to the transaction determined the purchase price by assessing the value of the Jindongdong, separately from the land in this case, it is difficult to view that the transfer price of the land in this case is an independent object from the "land under Article 94(1)1 of the former Income Tax Act" and it is reasonable to view that the transfer price of the land in this case is included in the transfer price of the land in this case.

① Article 212 of the Civil Act prescribes the scope of land ownership as it extends to the upper part of the land within the scope of legitimate profits. According to the above provision, it can be deemed that the ownership of the land in question extends to the underground space of the instant land located in Jindong Mining Act as a matter of principle, and otherwise, the ground provision recognizing the same excavation of the land under the ground as the object of separate ownership from the land (e.g., Article 5 of the Mining Industry Act explicitly provides for the subject of ownership of minerals separated from the land) or the procedural provision on the establishment and publication of ownership, such as registration of the specific part of the underground area of the land

② The method of management of the instant cultural heritage and the subject matter of independent ownership is entirely different from that of the instant cultural heritage, as it is a registered cultural heritage No. 308. However, Articles 2(1)3(a) and 53(1) of the Cultural Heritage Protection Act stipulate that the cultural heritage should be an object of independent ownership. In other words, Articles 2(1)3(a) and 53(1) of the same Act define historic sites, such as ancient pathum, ancient pathum, and pathum, which may be registered as cultural heritage, as well as facilities with high historical and academic value, and some structures attached to the instant land may be managed and protected as a registered cultural heritage according to any type of historical and academic value. In addition, so doing, it is difficult to evaluate that ancient pathy is entitled to an independent transaction object separate from the instant land under the Act (Article 55 of the Cultural Heritage Protection Act should also be deemed to belong to the owner of the instant cultural heritage where the change in the ownership of the instant land is reported.

③ In fact, so it is extremely difficult to separate and restore from the land of this case as it is difficult to evaluate dynamic mining from the land as the object of independent transactions in view of the concept of transactions. Meanwhile, even if the objects of independent ownership are part of objects, such as structures that do not reach up to the objects of independent ownership, it may be necessary to calculate the economic value in light of the necessity of transactions, and technically, it is most possible to assess the value of the relevant parts.

The income generated from the transfer of paintings and curios is listed as one of the non-taxable income. In principle, the above provision aims to exclude the income from the transfer of specific cultural properties, such as paintings and paintings, among the other income of the resident subject to the income tax, from the taxable object exceptionally. The Income Tax Act does not have a separate exception provision for the aforementioned purport for cultural properties located in a part of the real property, such as so-called so-called so-called “the income tax”.

⑤ Unlike this case, if the parties to the transaction determine the purchase price of the land itself as the purchase price of the land, the purchase price of the land plus the value of the highly agreed or presumed dynamic excavation, without separately assessing the value of the real estate through appraisal, etc., it is not easy for the tax authorities to separate the unique value of the land from the transfer price of the land in the process of imposing the transfer income tax (the same shall apply in that it is not appropriate for the tax authorities to apply the transfer income tax immediately on the ground that, regardless of the intent of the parties to the transaction, the objective appraisal price of the parts of the land, such as the identical excavation, etc., is arbitrarily calculated or to re-calculated through appraisal, etc., regardless of the intention of the parties to the transaction, if the value of the same excavation, etc. is not separately assessed as the items of the land. Meanwhile, according to the plaintiff's assertion that it is not reasonable to apply the transfer income tax under the standard market price because it is difficult to verify the actual transaction price of the relevant real estate as stipulated in Article 114 (7) of the Income Tax Act).

2) Whether the value of registered cultural heritage is subject to taxation

A) Article 94(1)4 of the former Income Tax Act provides that income generated from the transfer of business rights that are transferred along with fixed assets for business (land or buildings) shall be deemed capital gains, and that the business rights subject to taxation do not separately evaluate the relevant business rights, but include business rights that are recognized as being transferred along with assets and economic benefits that are obtained by obtaining authorization, permission, license, etc. from an administrative agency, even though they do not separately evaluate the relevant business rights.

Where all or part of fixed assets for business, such as land, etc., are used for a certain method to transfer fixed assets for business, and business rights are transferred along with fixed assets by separately evaluating the value of the relevant business rights through appraisal, etc., if the business rights are transferred along with the fixed assets, the amount calculated by adding the appraised value of the above business rights to the value of the land, etc., in lieu of separately assessing the value of the pertinent business rights, if the parties have determined the price of land, etc. by adding the generally estimated value of the business rights to the value of the pertinent business rights, the price of the land, etc., as determined shall be considered capital gains. It is understood to the purport that if the specific business rights, which are systematically combined with the fixed assets for business, regardless of the way agreed

On the other hand, in order to recognize the goodwill as a taxable object of capital gains tax, it is sufficient that the goodwill has an economic value separate from the fixed assets for business, such as land, etc., and for example, the nature of the fixed assets for business transferred along with the goodwill, whether a specific business utilizing the land subject to transfer has a public character, or the degree of public interest in the relevant business, etc., shall not affect the recognition of capital gains pursuant to

B) The Cultural Heritage Protection Act provides that the owner of the relevant cultural heritage shall manage and protect the relevant cultural heritage with due care as a good manager on the premise that it is possible to own the relevant registered cultural heritage, such as Jin-dong excavation (Articles 29(1), 33(1), and 59). On the other hand, where the relevant cultural heritage is disclosed to the general public, it shall collect admission fees from visitors (Articles 49 and 59). Under certain conditions, the Cultural Heritage Protection Act guarantees the owner of the cultural heritage for profit-making activities using the cultural heritage.

DD opened the Peace Museum on some of the lands of ○○○○ 1166 and 10 parcels of land on February 2004 and opened it for pay, such as Jin-dong. Meanwhile, at the time of conclusion of the sales contract on the instant land, DD assessed its value on the basis of the so-called “profit-making method,” i.e., the expected profit from the admission fee, etc. for Jin-dong digging. In light of the above legal principles, the Plaintiffs and the Defendant judged that the sales value of the instant land, which is part of the instant land, was included in the purchase price as the item of “registered cultural property,” and thus, the amount equivalent to its business value, constitutes capital gains under Article 94(1)4 of the former Income Tax Act.

3) Whether the value of trees, etc. is subject to taxation

A) In light of the language and purport, and structure of Article 19(1)1 and (3) of the former Income Tax Act, the main text of Article 29 and the main text of Article 51(8) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26067, Feb. 3, 2015; hereinafter “former Enforcement Decree”), if the forest trees were transferred along with forest land, only the remaining income from the transfer of the forest land, in principle, is subject to capital gains tax on the transfer of the forest land. In addition, in light of whether the income from the transfer of the forest trees falls under the business income, it is reasonable to determine whether the Plaintiffs were for the purpose of producing the forest trees and whether it appears to have been subject to capital gains tax on the land (see, e.g., Supreme Court Decision 100Do1701, Mar. 17, 200). Moreover, even if the forest land was transferred with the forest land, it cannot be seen that the land is subject to taxation on the forest land for growing.

C) Therefore, the price for the transfer of trees and obstacles on the ground of ○○-ri 1171 is also subject to the transfer income tax following the transfer of the instant land.

4) Whether the transfer value of the subsidy amount is deducted

A) From June 2009 to June 201, 201, DDR received national and local expenses of KRW 934,717,000 as the instant subsidy under the pretext of the development project, etc. for Jindong Mining. Meanwhile, Korea paid only the remainder after deducting KRW 467,358,500 out of the instant subsidy from the total purchase price at the time of purchase of the instant land as the purchase price to the Plaintiffs. Accordingly, as otherwise alleged by the Plaintiffs, Korea is not limited to the redemption of the portion paid from the State expenses out of the instant subsidy, and it is assessed that the amount of the subsidy to be recovered was offset against the purchase price to be paid by Korea, and thus, the total purchase price of the instant land, including the amount of the subsidies to be recovered in lieu of the purchase price, becomes the transfer price of the instant land.

B) Meanwhile, Article 97(1) of the former Income Tax Act stipulates that capital expenditure, transfer expense, etc. prescribed by Presidential Decree (Article 2 and 3) shall be deducted from the transfer value, along with the acquisition value of land, etc. as necessary expenses. Article 163(3) of the former Enforcement Decree of the Income Tax Act lists “expenses disbursed for the alteration, improvement, or convenience of the use of transferred assets” as capital expenditure, and Article 97(5) of the same Act lists “expenses for preparation of contract, notarial act, stamp, and introduction expense” as above transfer expense.

In light of the structure of the foregoing provision and the contents of the language and text, there is room to find evidence that the instant subsidy constitutes a single-class transfer cost, etc. of necessary expenses deducted from the transfer value. However, in light of the aforementioned application and the details of disbursement prior to the instant subsidy, some of them may be assessed as capital expenditure.

C) However, in full view of the following circumstances revealed by the facts and evidence as seen earlier, and the purport of the entire pleadings, it is deemed a legitimate taxation act that the Defendant did not recognize the amount of the instant subsidy as a necessary expense deduction from the transfer value, in addition to excluding the Plaintiffs’ amount equivalent to the value of the instant land from the transfer value.

① The considerable portion of the instant subsidy was disbursed for the improvement or convenience in use of transferred assets, such as the improvement, repair, reinforcement, etc. of the passage routes in the Jindong-dong area, but on the other hand, it appears that the total amount of subsidies of KRW 294,717,143 were disbursed as a new toilet for the convenience of visitors to the Peace Museum.

② The relevant toilet appears to have been constructed on the land of ○○○-ri 1166 and 847, along with the remaining peace museum facilities, such as Japan’s Military Site Museum. The above toilets, as buildings, are treated as real estate separate from the land of ○○-ri 1166 and 847, and land of ○○-ri 1166 and 847 is also clearly distinguishable from the land of this case, which is subject to the transfer income tax of this case. Therefore, even if part of the subsidy of this case was disbursed for improvement or convenience of use of the above toilet, it is difficult to evaluate it as capital expenditure on the land of this case, which is a separate real estate independent of the above toilets.

③ Of the purchase price of the instant land, KRW 735,940,707 was based on the appraisal value of all the present prices of the facilities open to the outside of Jindong. The said appraisal value of the said digging facilities exceeds KRW 639,99,857 ( KRW 934,717,000 - KRW 294,717,143) which is the amount excluding the portion paid for the new toilet out of the subsidies of this case. However, if the said construction is the result of installation, maintenance, and repair of the internal facilities, such as Jindong, which is the object of moving off, and electric power, broadcasting, and fire-fighting systems, such construction is not always deemed to have been assessed from a different point of view. Accordingly, it cannot be readily concluded that the Defendant’s tax amount of the instant subsidy was disadvantageous to the Plaintiff when considering the amount disbursed for the maintenance, repair, etc. of Jindong out of the subsidies of this case as the result of deducting the amount of the instant land from the transfer value.

④ Meanwhile, the application, receipt, and redemption of the instant subsidy were made in the name of Maman, not the Plaintiffs, and thus, according to an agreement to substitute for the payment of the purchase price of the instant land, the amount equivalent to the amount of the instant subsidy out of the total purchase price, at least, ought to be assessed as having been borne by DD as a result. However, even though some of the instant subsidies were to be considered as capital expenditure in the process of calculating capital expenses for DD with respect to the part (○○ 1166-1) of the instant land, a seller of equity interest in the instant land (○○ 166-1), it is not always clear that the grounds for deeming the relevant subsidy as necessary expenses are to be deducted.

5) Sub-decisions

Therefore, all of the plaintiffs' arguments are without merit.

4. Conclusion

Therefore, all of the plaintiffs' claims are dismissed as it is without merit. It is so decided as per Disposition.