The imposition of gift tax is legitimate for the portion returned to the decedent and the medical expenses, etc. for living without escaping from the intention of ordinary support as a family community.

Inheritance Tax and Gift Tax Imposition is legitimate for the portion returned to the decedent and the cost of living expenses, etc. without going beyond the intention of ordinary support as a family community.

Article 2 (Gift Tax Taxables) of Inheritance Tax and Gift Tax Act

District Court 2014Guhap9306

Ma00 et al.

00. Head of tax office

March 29, 2016

May 10, 2016

1. All of the plaintiffs' claims are dismissed.

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

Cheong-gu Office

The Defendant’s imposition of KRW 0,00,000,000 and KRW 00,000,000 as gift tax on Plaintiff 00 and KRW 000,000 as gift tax on December 1, 2012, and the imposition of KRW 00,00,00 as gift tax on Plaintiff 1 Kim0 are revoked.

1. Details of the disposition;

A. On October 30, 201, Plaintiff 00 and le00’s subsidiaries (hereinafter “the decedent”) died on October 30, 201, and Plaintiff 1 Kim00 is the spouse of Plaintiff 00. Plaintiff 00 and le00, who are co-inheritors, reported and paid KRW 2,062,000,000 of the inherited property value within the inheritance tax reporting deadline.

B. From August 1, 2012 to December 8, 2012, the Central Regional Tax Office: (a) conducted a tax investigation related to the death of a decedent; (b) the Defendant, according to the result of the said tax investigation, deemed that the Plaintiff 00 received a gift in advance, totaling KRW 3,904,871,986 before the decedent’s birth; and (c) notified the said Plaintiff of KRW 2,208,885,860 and inheritance tax amounting to KRW 682,732,140; and (d) deemed that the Plaintiff 1,874,818,968 were donated in advance, and determined and notified the said Plaintiff of KRW 974,317,250 as gift tax.

C. The Plaintiffs were dissatisfied with the Plaintiffs, and filed an objection on February 18, 2013, and the Director of the Central Tax Office of the Central Tax Office of China.

On May 31, 2013, partially accepted the Plaintiffs’ objection, and made a decision to revoke part of the gift tax or inheritance tax against the Plaintiffs. The Plaintiffs again filed an appeal with the Tax Tribunal on September 3, 2013 on the portion that was not revoked. On August 11, 2014, the Tax Tribunal dismissed the Plaintiff Kim 00’s appeal, but made a decision to re-examine the amount of KRW 1,003,449,839 out of the amount that was deemed as a prior donation.

D. After conducting a reinvestigation according to the above decision of the Tax Tribunal, the Defendant rendered a decision to reduce the amount of gift tax and inheritance tax corresponding to the above amount on October 13, 2014 on the ground that Plaintiff 00 had not received prior donation on the aggregate of KRW 1,003,449,839 and KRW 4,700,000 for additional KRW 1,008,149,839. The Defendant decided to reduce the amount of gift tax and inheritance tax corresponding to the above amount. The Defendant made a decision to reduce the amount of gift tax and inheritance tax corresponding to the above amount on November 26, 2015 on the ground that the sum of KRW 3,200,000 deposited from the account of the inheritee cannot be deemed to have been attributed to the Plaintiffs.

E. Accordingly, only KRW 1,147,250,519 of gift tax on Plaintiff 00 and KRW 484,427,474 of inheritance tax, and KRW 404,411,530 of gift tax on Plaintiff 1 Kim full-time as of the date of closing the argument of this case (hereinafter “instant disposition of imposition of gift tax and inheritance tax”), among the tax amount originally imposed on Plaintiff 00 as of the date of closing the argument of this case, remains (hereinafter “instant disposition

[Ground of recognition] Unsatisfy, Gap evidence 1-1, 2, Eul evidence 1-1, 1-2, Eul evidence 1-2, Eul evidence 3, Eul evidence 4-1, Eul evidence 8, 10 through 12, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiffs' assertion

Although the duty of proving that the Plaintiffs received advance donation from the inheritee was imposed on the Defendant, the Defendant, without sufficient proof, deemed that all the funds deposited in the Plaintiffs’ account based on a simple presumption was donated to the inheritee. Moreover, although the Plaintiffs’ money transferred includes the portion immediately returned to the decedent and the expenses incurred in supporting the decedent as living expenses and hospital expenses, it is unreasonable to deem that the entire amount was donated without consideration.

B. Determination

According to the evidence mentioned above, the defendant imposed gift tax and inheritance tax on both the original amount of money deposited into the plaintiff's account and the amount of money withdrawn from the deceased's account but its address cannot be confirmed. However, it can be recognized that the amount of money withdrawn from the deceased's account through the procedure of raising an objection and requesting a trial, but its address cannot be confirmed, is subject to taxation only for the remaining amount of money deposited into the plaintiff's account except for the taxable amount for the reason that it cannot be determined as the prior donation property. In light of each of the records of the gift contract (Evidence No. 5) and the record No. 6 (Evidence No. 6), it is reasonable to view that the amount of the plaintiff's prior donated property based on the disposition of this case was reasonably calculated through objective evidence.

On the other hand, most of the funds that the plaintiffs donated by the decedent is immediately the decedent.

In addition, there is no evidence to prove that the donee returned the gift tax, and the gift tax satisfies the taxation requirements when the donee acquires the property by gift. Thus, even if the plaintiffs immediately returned part of the funds donated from the decedent, this is merely a situation after the establishment of taxation requirements (Article 31(4) and (5) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 13557, Dec. 15, 2015) provides that gift tax shall not be imposed in cases where the donee returns the donated property to the donor within a given period or donated the donated property again. However, this provision does not apply to monetary donation), even if the plaintiffs used part of the donated property by the deceased's living expenses or medical expenses, etc., it is reasonable to view that even if the plaintiffs used it as part of the donated property by the deceased, it does not go beyond the scope of duty of support normally borne by

3. Conclusion

Therefore, the plaintiffs' claims are dismissed in entirety because they are without merit.