Whether a public sale constitutes a transfer under the Income Tax Act

The ownership of the instant real estate transferred from the Plaintiff through the public sale procedure constitutes the commercial transfer of assets subject to capital gains tax.

Article 88 of the Income Tax Act

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The Defendant’s disposition of imposition of KRW 402,853,070 on May 8, 2005 against the Plaintiff was revoked.

1. Circumstances of dispositions;

A. On February 11, 1994, the Plaintiff acquired the instant real estate by gifting it to ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○

B. Meanwhile, as the Plaintiff did not pay gift tax on the receipt of the pertinent real estate, the Defendant seized the instant real estate on October 4, 1999 and conducted the auction procedure. As a result, the instant real estate was sold to ○○○○○○○○○○○○○○○○○○○○○○○○○ on December 26, 2002, and the registration of ownership transfer was completed on December 31, 2002. On February 7, 2003, the Defendant: (a) on February 7, 2003, 23,480,180, and 406,198,350, and 3,07,321,470, among the above collateral amount of the Plaintiff’s gift tax on the Defendant, distributed the sales statement to ○○○○○○○○○○○○○○○○○○○○○○ on the basis of the amount of each of the instant real estate (as indicated in the order of priority).

C. On May 8, 2005, the Defendant rendered the instant disposition imposing KRW 402,853,070 on the Plaintiff on May 8, 2005, deeming that the ownership of the instant real estate transferred from the Plaintiff to ○○○ and two other persons constitutes a commercial transfer of assets subject to capital gains tax.

[Grounds for Recognition] Unsured Facts, Gap 2, 3, Eul 1, 2

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff merely provides the instant real estate as collateral, not as the secured obligor of the right to collateral security on the instant real estate, but as the secured obligor of the instant real estate. Even if the secured obligation was repaid through the public sale procedure on the instant real estate, it cannot be deemed that the Plaintiff incurred any profit to the Plaintiff. Therefore, the Plaintiff did not have obtained any capital gains from the public sale of the instant real estate, and thus, the instant disposition that imposed

B. Determination

Article 88 (1) of the Income Tax Act provides that "it means that an asset is actually transferred for consideration due to sale, exchange, investment in kind in a corporation, etc., regardless of the registration or enrollment of the asset which is subject to capital gains tax." If the real estate of this case, which is owned by the plaintiff, is removed from ○○○○○○○ through the above public sale procedure and its ownership is transferred, it is apparent that it constitutes a transfer of asset which is subject to capital gains tax prescribed in the above provision. Further, since the above public sale procedure was conducted due to the plaintiff's delinquency in the gift tax on the real estate of this case, 23,480,180 won as expenses for disposition on default, and 406,198,350 won as the above amount was distributed and appropriated to the plaintiff as a matter of course, each of the above amounts should be deemed to have been reverted to ○○○○○○○○○○○○○○○○○○○○○○○6, which is the owner of the real property of this case.

Therefore, the plaintiff's assertion that there was no capital gains from the public sale of the real estate of this case is without merit, and the disposition of this case is legitimate.

3. Conclusion

Thus, the plaintiff's claim seeking the cancellation of the disposition of this case cannot be accepted, and it is dismissed.