The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Article 40(1) of the Corporate Tax Act provides that “The business year during which a domestic corporation’s profit and loss accrue shall be the business year to which the date on which the profit and loss accrues belongs,” and Article 68(1)3 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 23589, Feb. 2, 2012) provides that “the business year to which the profit and loss accrue for the transfer of assets other than the goods, etc. belongs” shall be the business year to which the date on which the profit and loss is settled,” and Article 40(2) of the former Enforcement Decree of the Corporate Tax Act provides that “the business year to

As such, the Corporate Tax Act adopts the principle of confirmation of rights and obligations that the profits and losses are to be realized at the time of establishing the rights and obligations to clarify the time when profits and losses accrue.

This is to promote legal stability and fair taxation by uniformly identifying taxable income of taxpayers and at the same time to exclude taxpayers from taxation.

(See Supreme Court Decision 2003Du10329 Decided February 13, 2004, etc.). The lower court determined that the Plaintiff’s loss should be included in deductible expenses for the business year in which the date of the sale of ELW falls, by deeming that the Plaintiff’s loss was realized and confirmed by deducting the sale price from the acquisition price of ELW acquired from the issuer by selling the ESW (hereinafter “ELW”) to investors.

The above determination by the court below is justifiable in accordance with the above legal principles.

In so determining, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or by misapprehending the legal doctrine regarding the period of attribution of profits

2. Whether the substance over form principle is violated (Ground of appeal No. 2)

(a) Article 14(2) of the Framework Act on National Taxes shall apply to the calculation of tax base under tax-related Acts according to its substance, irrespective of the name or form of the income, profit, property, act or transaction;