Whether the property presumed to be inherited pursuant to Article 15(1) of the former Inheritance Tax and Gift Tax Act concerning the presumption of inheritance of the property disposed of before the commencement of the inheritance date is immediately subject to a spouse deduction (negative)

Article 15(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) provides that the presumption that a spouse succeeds to a certain property pursuant to Article 15(1) of the same Act means either disposing of inherited property in advance or bearing debt in advance to prevent the intention to avoid inheritance by inheritance of property that is not easy to be exposed to taxation data such as cash. On the other hand, Article 19(1) of the same Act provides that the spouse’s actual amount of inherited property should be deducted from the taxable value of inherited property in consideration of the fact that the inheritance between the spouses is not transfer between generations and horizontal transfer, it would be necessary to impose taxes on the legal portion of inherited property at the time of the death of the remaining spouse after reserving the taxation of inherited property. Article 19(1) of the same Act provides that the presumption that a spouse’s actual amount of inheritance deduction can not be recognized as the amount of inheritance deduction, and that it can not be presumed that the heir’s actual amount of inherited property could not be presumed as the entire inheritance property of inheritance.

Articles 15(1) and 19(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002)

Plaintiff 1 and four others (Attorney Lee Jae-soo, Counsel for the plaintiff-appellant)

The superintendent of the tax office

Seoul High Court Decision 2004Nu6626 delivered on March 16, 2005

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

We examine the grounds of appeal.

Article 15(1)1 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter “the Act”) provides that where the amount of the property of an ancestor disposed of or withdrawn from the property of an ancestor is not less than 200 million won by type of the property within one year before the date inheritance commences, and where the purpose of use is not objectively clear as prescribed by the Presidential Decree, it shall be presumed that the heir succeeds to the property. Article 19(1)1 of the Act provides that the amount of the actual inheritance shall be deducted from the taxable value of the inheritance. The presumption that the heir succeeds to a certain property pursuant to Article 15(1)5 of the Act provides that if the heir is not the one who actually received the inheritance by disposing of the inherited property in advance or bearing a debt in order to prevent the inheritance from being exposed to taxation data, the legislative purport of the presumption that the spouse is not the one who actually acquired the inheritance from the inheritance of the heir is not the one who actually acquired the inheritance tax deduction among the remaining inheritance.

In the same purport, the court below is just in holding that, among the estimated inherited property of this case, the spouse's statutory share of inheritance under Article 19 (1) of the Act shall not be immediately included in the "amount actually inherited" or such presumption shall not be deemed to have been received by the spouse, and since there is no evidence to acknowledge that the amount equivalent to the spouse's share of statutory inheritance among the estimated inherited property of this case has been actually inherited to the spouse, it shall be excluded from the subject of the spouse's deduction in calculating the inheritance tax of this case. There is no error in the misapprehension of legal principles as to the property presumed to have been inherited under Article 15 (1) of the Act, the spouse's deduction under Article 19 (1) of the Act

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Jae-sik (Presiding Justice)