Whether reserve funds for proper business purposes are included in deductible expenses

Since the acquisition of real estate for profit is not used for proper purpose business, etc., the acquisition price of real estate shall be included in gross income.

Article 29 of the Corporate Tax Act

Suwon District Court 2014Guhap50461 (Law No. 17, 2015)

A school foundation 000 Private Teaching Institutes

00. Head of tax office

15.05.06

oly 2015.17

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s disposition of imposition of corporate tax of KRW 3,132,298,290 to the Plaintiff from March 1, 2011 to February 29, 2012, imposed on the Plaintiff on April 2, 2013, shall be revoked.

1. Details of the disposition;

A. The plaintiff who is a school foundation that operates 00 middle schools is 00 :00 :00 :00 :

"After receiving the contribution of 55-14 square meters, 2,938 square meters, and 46 square meters (hereinafter referred to as "the instant land")", Gyeonggi-do, which is a public project operator of the instant land on January 5, 2010, has its fundamental property.

Compensation 24,083,197,934 won from the Gyeonggi-do Si Corporation, etc. in response to the consultation by the Si Corporation, etc.

After receipt, 23,099,147,294 won (hereinafter referred to as "sale price of the land of this case") excluding some of the double costs is included in deductible expenses as reserves for proper purpose business, and the corporation tax was reported during the business year between March 1, 2009 and February 28, 2010.

B. The plaintiff shall deposit and manage 23,099,147,294 won as fixed deposit for the above proper purpose business.

on June 30, 201, the part of the term deposit shall be terminated with the permission of the competent Office of Education.

On August 3, 2011, Seoul 00-Dong 00,000 ground buildings (hereinafter referred to as the "instant buildings")

The acquisition was made in 10,200,000 won.

(c) A regional tax office has examined the post management of reserve funds for proper purpose business of school juristic persons;

In this case, 23,099,147,294 won, which was included in deductible expenses as reserves for proper purpose business by the plaintiff

10,200,000 won used for the acquisition of a building is not used for the proper purpose business and notify the defendant who is the head of the competent tax office thereof.

D. The Defendant’s sale price of the instant land is KRW 23,09,147,294 due to the disposal of fixed assets.

In principle, income accrued from the acquisition of the building of this case, which falls under Article 3 (1) 5 of the Corporate Tax Act, but the Plaintiff was excluded from the subject of corporate tax by appropriating it as reserves for its proper purpose business in deductible expenses. Among them, by applying Article 29 (4) 4 of the Corporate Tax Act, it shall be included in gross income for the business year from March 1, 2011 to February 28, 2012, which belongs to the acquisition date of the building of this case, and by applying Article 29 (4) 4 of the Corporate Tax Act, it shall be included in gross income for the business year from March 1, 2011 to February 28, 2012. On April 2, 2013, the Plaintiff notified the Plaintiff of corporate tax of KRW 3,132,298,290, including additional tax 425,777,378,378

○ Underreporting (general) 221,90,291 won (=calculated tax amount of 2,219,902,912 x 10%)

○ Amount of KRW 203,787,067 (=calculated tax amount of KRW 2,219,902,912 x 306 x 0.03%)

D. The Plaintiff dissatisfied with the instant disposition and filed a tax judgment on June 19, 2013, but the tax judgment was rendered.

On October 22, 2013, the Board dismissed the plaintiff's appeal.

Facts without any dispute, Gap's 1, 2, 5, 6, and 8, the purport of the whole pleadings, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The instant land is assets used directly by the Plaintiff for the proper purpose business, as prescribed by the Corporate Tax Act.

According to the plaintiff, the disposal of fixed assets used directly by non-profit domestic corporations such as the plaintiff for proper business.

income derived from the income subject to taxation, but the sale price of the land of this case is excluded from income subject to taxation.

Since corporate tax is not subject to corporate tax from the beginning, the defendant's objection is included in the gross income.

The instant disposition is unlawful.

2) The Defendant transferred the sales price of the instant land to the reserve for proper purpose business.

C. Of them, 10,200,000 won, which is part of the funds for the purchase of the building of this case, is used for the purpose of the purchase of the building of this case, and corporate tax was imposed on the ground that the reserve funds for the original purpose business are merely nominal. However, the Plaintiff did not have a plan to purchase the building of this case at the time of the transfer of the reserve funds for the original purpose business of this case, and the Plaintiff did not add the reserve funds for the proper purpose business only on the pretext of

3) Even if the above sale price is subject to corporate tax, the Plaintiff’s above sale price is subject to corporate tax.

The tax authority has reported the gold to the tax authority after the settlement of accounts; Provided, That the corporation is subject to the imposition of corporate tax

In the think that it was not an income, the report was omitted from the corporate tax return, and that it was not an income.

No additional tax may be imposed on the failure to report due to justifiable grounds;

Of the instant disposition, the part concerning additional tax should be revoked as it is unlawful.

B. Determination

1) Determination as to whether the sales price of the instant land is subject to corporate tax assessment

A) former Corporate Tax Act (amended by Act No. 9673 of May 21, 2009, hereinafter the same)

According to Article 3 (1) 1, income tax for each business year of a non-profit domestic corporation shall be imposed.

section 3(5) of the same section shall be subject to, and shall be entitled to, fixed assets (fixed persons directly used for the high-use business);

"Revenues prescribed by Presidential Decree" generated from the disposal of fixed assets to be excluded from the object of imposition of corporate tax as one of the income for each business year, and Article 2 (2) of the Enforcement Decree of the same Act concerning the revenues from the disposal of fixed assets to be excluded from the object of imposition of corporate tax refers to the direct use of the relevant fixed assets for the proper purpose business (excluding profit-making business under paragraph (1)) prescribed by statutes or the articles of incorporation for at least three consecutive years as of the date of disposal of the relevant fixed assets. In such cases, where there are incidental profits, such as admission fees and admission fees, etc.

The Act provides that this shall be deemed as fixed assets used directly for the proper purpose business, and ultimately, the Act.

In principle, the income accrued from the disposal of fixed assets such as the land in this case shall be the corporate tax.

On the other hand, since the Plaintiff, a school juristic person, and a non-profit domestic juristic person directly uses for the proper purpose business for a certain period of time, income from the disposal of fixed assets directly used for the proper purpose business is excluded from the subject of corporate tax assessment, as alleged by the Plaintiff in this case, whether the land in this case was directly used for the proper purpose business and the price of the land

B) Gap evidence 10, 11, 16, 17 through 21 (including the number number, respectively)

Article 1 of the Plaintiff’s Articles of Incorporation in full view of each description and the purport of the entire argument of the witness 00 testimony

The purpose of this corporation is to provide secondary education on the basis of the educational ideology of the Republic of Korea.

The facts stated in this case. The plaintiff received the contribution of this case as basic property, and profits therefrom.

With respect to the production of salt from the date of possession as basic property to the date of 2000, the cooperation shall be made from the date of disposal;

revenue arising from the lease of part of the land in this case to the farmer at the time of expropriation;

It can be recognized that the school operation expenses have been appropriated for the school operation expenses. According to the above facts of recognition, the plaintiff is recognized.

A corporation whose proper purpose business is the educational business shall operate or engage in the salt farm as above.

It shall not be directly used for the education business which is the proper purpose business of the plaintiff, and

The income accrued from the operation or lease of the salt farm was appropriated for school operating expenses.

Even if the land of this case is used directly for its proper purpose, it cannot be said that it was used directly for its proper purpose.

In addition, the Plaintiff’s revenue from the operation of the salt farm or the lease business in the instant land is a law.

Since the land in this case is not a business income subject to income tax, it is directly related to the proper purpose business.

Although it is alleged to the effect that it cannot be deemed to have been used, Article 3(3)1 of the former Corporate Tax Act can not be applied.

business income, and income arising from the disposal of fixed assets, subparagraph 5 of the same paragraph shall each be the business income.

The annual income, which is subject to the corporate tax, provides that the above salt is subject to taxation.

The corporate tax shall be the business income prescribed by subparagraph 1 of the same paragraph, which is the revenue from the operation or lease of the previous business;

Without connection to the subject of the tax, revenues from the sale price of the land of this case shall not be the subject of the tax

In principle, corporate tax is subject to corporate tax in accordance with subparagraph 5.

C) Meanwhile, the Plaintiff: Article 48(2)4 of the Inheritance Tax and Gift Tax Act; Article 38 of the Enforcement Decree of the same Act

According to Paragraph 4 of Paragraph 4 of this Article, the donee, who is a public-service corporation, sells property contributed to the donee for profit

the amount disbursed to acquire the capital shall be the amount directly used for the public interest.

In addition, the private school-related laws and regulations have the same school foundation as the Plaintiff for the same profit as the land in this case.

In order to raise profits from fundamental property, appropriation for school operation expenses is prescribed as legal obligations.

(2) The educational authority shall take measures to improve the profit structure related to profit-making property, such as the plaintiff.

The plaintiff in this case is encouraged to submit the results of the establishment and implementation.

Existing land price of this case established and kept as purpose reserve has been lost due to land expropriation;

for profit as a substitute for the basic property of this case, to purchase the building of this case

Since this is used directly for the proper purpose business, it is subject to the corporate tax.

I asserts to the effect that it does not constitute an act.

The term "non-profit domestic corporation" in Article 29 (1) of the former Corporate Tax Act.

for each business year, only the organization prescribed by Presidential Decree shall apply to the corporation's proper purpose.

In order to disburse projects or designated donations (hereafter in this Article, referred to as "business with proper purpose, etc."),

Where reserve funds for proper purpose business are appropriated as losses, a crime of the sum of the following amounts:

The above provision that the income amount of the business year shall be included in deductible expenses.

Part, paragraph (4) of the same Article shall read the balance of the reserve fund for essential business included in the loss under paragraph (1).

Where a non-profit domestic corporation which has the amount of money falls under any of the following subparagraphs, the relevant reasons:

"Inclusion in gross income in calculating the income amount for the business year including the date on which such an occurrence occurred".

section 4 of the same section as one of the reasons to be included in gross income.

The proper purpose business, etc. to which five years pass from the end of the business year in which the amount is appropriated as deductible expenses;

The "time (limited to the balance not used within five years)" is listed.

In full view of these provisions, the Corporate Tax Act is corporate tax for non-profit domestic corporations.

Even if there is any revenue which is subject to taxation, the corporation is its proper purpose business

Where it is promised to use it for the proper purpose business within five years, it shall be included in the calculation of losses.

corporation shall be exempted from corporate tax for the purpose of making it possible, and the purpose business exempted from corporate tax shall be exempted.

the reserve funds are not in compliance with the initial commitment to be used for the proper purpose business;

(2) the corporation shall withdraw the corporate tax exemption and shall again impose the corporate tax on it.

corporation's revenue is used for a for-profit business or for its own purpose;

its own purpose rather than to be used for holding assets not directly related to the business;

The purpose of legislation is to ensure that the business is used as soon as possible for itself.

In order to clarify the purpose of legislation, the above provision of the Corporate Tax Act is to impose corporate tax.

requirement that ‘direct use’ should be made for its own purpose with respect to property excluded from the subject;

Article 56 (5) of the Enforcement Decree of the same Act shall also apply to the purpose of the special purpose reserve.

The term "fixed purpose business" is defined as "business which directly carries on the purpose of the establishment as stipulated in the Acts and subordinate statutes or the articles of incorporation of non-profit domestic corporations other than for-profit business falling under the provisions of paragraph 1 of Article 2."

On the other hand, Article 48(1) of the Inheritance Tax and Gift Tax Act provides that the donee shall withdraw.

The principle that the value of the donated property shall not be included in the taxable value of donated property. Article 2(2) of the Inheritance Tax and Gift Tax Act provides that "Where the donated property is not used for the purpose of direct public interest projects, etc. (including the case where it is operated for profit-making projects to appropriate it for the direct public interest projects; hereafter the same shall apply in this subparagraph) or for the purpose of direct public interest projects, etc. within three years from the date of its use or contribution (including the property increased by the proceeds from sale, and excluding the public charges, etc. prescribed by Presidential Decree), "where it is not used for the purpose of public interest projects as prescribed by Presidential Decree (including the property increased by the proceeds from sale) or the proceeds from sale thereof, etc., the gift tax shall be levied immediately on the donated property of the public interest corporation. In full view of the provisions of the Inheritance Tax and Gift Tax Act, in principle, the gift tax shall not be imposed, but in order to prevent such exemption from the gift tax from being used for the purpose of public interest projects.

any profit accruing from the public interest project shall be included in light of the text of the above provision.

It is clear, however, that the provisions of the Inheritance Tax and Gift Tax Act on the exemption and restriction of gift tax are not appropriate for the purpose of the gift tax system, and thus, the gift tax is exempted, but in order to prevent the exemption of gift tax from being used as a means of avoiding the inheritance tax or gift tax on a public-service corporation, the gift tax shall be used for the public-service business in order to maintain the exemption of gift tax in order to prevent the exemption of gift tax from being used as a means of avoiding the inheritance tax or gift tax

If used for the following purposes, it shall be deemed to have been used as a means of tax avoidance;

Since it is difficult to achieve the public interest, the benefit of gift tax exemption is the same as it is used directly for the public interest.

The purpose seems to be to maintain.

As such, the Inheritance Tax and Gift Tax Act differs from the Corporate Tax Act and its legislative intent.

The provisions of the tax and gift tax law or its interpretation should be applied to the Corporate Tax Act as they are.

income of a non-profit domestic corporation shall not be used as soon as possible in the proper purpose business.

In the interpretation of the Corporate Tax Act, the basic property for profit is defined as the basic property for profit.

for the sole purpose of the basic property for profit-making solely on the ground that it is appropriated to the school operating expenses in order to raise profits.

Since it cannot be viewed as a case of direct use in business, the plaintiff's above assertion also accepted.

shall not be eligible for such approval.

2) Determination as to the assertion that reserves for proper purpose business are not appropriated on the nominal basis

The defendant, in principle, has sold the land of this case subject to corporate tax.

23,09,147,294 won was included in the calculation of earnings of the business year including the acquisition date of the building of this case and was exempted from corporate tax by appropriating it as expenses for the proper purpose business. Thus, 10,200,000 won out of 23,09,147,294 won as the proper purpose business reserve fund for the proper purpose business within five years. The plaintiff's assertion that 10,200,000 won out of 23,09,299,297,294 won should be appropriated as the proper purpose business fund for the proper purpose business of this case and used for other purpose than the proper purpose business of this case is not the proper purpose business fund for the proper purpose business of this case. The plaintiff's assertion that 10,200,000 won used for other purpose by applying Article 29 (4) 4 of the Corporate Tax Act is not the proper purpose business fund for the proper purpose business of this case, but it is merely the other purpose business fund of this case.

3) Determination on the assertion that the omission of corporate tax return has justifiable grounds

In order to facilitate the exercise of taxation rights and the realization of tax claims, additional taxes under tax law

Where a taxpayer violates all kinds of obligations, such as reporting and tax payment, prescribed by law without justifiable grounds;

In administrative sanctions imposed in accordance with the provisions of the separate tax-related Act, the taxpayer's intent and negligence shall be considered.

Although it is not unreasonable for a taxpayer to be aware of his duty, it can be said that the taxpayer was not aware of his duty.

to the parties to the obligation, in the circumstances in which it is reasonably available or the performance of that obligation is expected by the parties.

In a case where there is a justifiable reason to believe that the failure to perform his/her duties is unreasonable, such as a case where there is a reason that it is unreasonable.

No one may impose such tax (see, e.g., Supreme Court Decision 2003Du13632, Jan. 27, 2005).

As to this case, the health care unit, and the business year from March 1, 2009 to February 28, 2010

of the purchase price of the land of this case to obtain income from the sale price of the land of this case and to be exempted from corporate tax

section 29(3) of the Corporate Tax Act was included in the loss as reserve funds for its proper purpose business;

A nonprofit domestic law that has a balance of the reserve fund for essential business included in deductible expenses under the provisions of paragraph (1).

Where a person falls under any of the following subparagraphs, the balance shall belong to the day on which such cause occurs:

In calculating the income amount for the business year, the proper item is stipulated as "including it in the gross income."

(1) If the reserve funds are not used for its original purpose, such cause has occurred.

to be included in the gross income in the corresponding business year, and the old Corporate Tax Act

The meaning of the proper purpose business is clearly defined in Article 56 (5) of the Enforcement Decree.

In the case of the Plaintiff’s declaration of corporate tax for the business year between March 1, 2011 and February 28, 2012, this shall apply.

It is reasonable to present that the amount equivalent to the purchase price of the building of this case is not added to gross income.

of the parties to the agreement that it is unreasonable to expect the parties to perform the obligations.

Therefore, the plaintiff's above assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so ordered as per Disposition.

shall be ruled.