The propriety of any disposition imposed after evaluating unlisted stocks by supplementary evaluation methods under the Inheritance Tax and Gift Tax Act

The market price may be recognized as the market price within 3 months before or after the base date of appraisal, but in cases where the market price is unclear, the market price is assessed as a supplementary method of assessment, and thus, it cannot be recognized as the market price because the date of transaction is more than 3 months before or after the date of donation.

Article 60 of the Inheritance Tax and Gift Tax Act: Principles of Appraisal

Article 54 (Appraisal of Listed Stocks) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of gift tax of KRW 321,434,400 against the Plaintiff on August 17, 2005 is revoked.

1. Details of the disposition;

A. On March 19, 2001, the Plaintiff was donated 50 shares (the face value of KRW 1 million was divided into KRW 100,000 and KRW 5,000 was divided into KRW 10,00,00; hereinafter the instant shares) from his spouse Kim○○○○○○, a stock company (hereinafter the “○○”).

B. In applying Article 63 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter the same shall apply), Article 54 of the former Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17459, Dec. 31, 2001; hereinafter the same shall apply), Article 63 of the former Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17459, Dec. 31, 2001; hereinafter the same shall apply), the Defendant assessed the value of one share (hereinafter the shares after division; hereinafter the same shall apply) of the instant shares subject to the donation as the largest shareholder, and assessed the value of the instant shares as 293,064 won calculated by adding the rate of increase in the largest shareholder to 20%, 1,465, 300, 300, 304, 3004, 408

(A) Evidence Nos. 1, 1, 2 and the purport of the whole pleadings and arguments

2. The legality of disposition.

A. The plaintiff's assertion

From March 19, 2001 to August 16, 2002, from March 22, 2000, when the Plaintiff received the instant shares from Kim ○○, the Plaintiff traded ○○ stocks with KRW 10,00 per share over several occasions, and demanded 21,780 per share to purchase ○○ stocks owned by ○○, a shareholder of ○○, and ○○○, a shareholder of ○○, to the Plaintiff at KRW 21,780 per share. Thus, the Defendant’s disposition of this case, which assessed the per share value of the instant shares as KRW 293,064 per share, is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

(1) The annual management performance of ○○ Co., Ltd. is indicated in the following table.

Classification

1998

199

200

201

202

Sales

3,132,553

2,819,612

4,179,561

3,644,886

3,347,010

Current profit and loss

157,536

41,246

428,994

256,434

288,686

Capital

50,000

50,000

120,000

400,000

500,000

Ratio of Capital Profits

315,07%

82.49%

357.49%

64.10%

57,73%

(2) As of December 31, 2001, the net asset value of ○○○ Co., Ltd., Ltd. as of December 31, 2001, including goodwill, is 1.059.719.99.906 won as indicated below, and the net asset value of ○○○○ Co., Ltd., which added 63,64,637 won, calculated pursuant to Article 59(2) of the former Inheritance Tax and Gift Tax Act, plus 63,64,543 won (=1,059,719,719,906 + 63,64,637 won). The net asset value per ○○○○ Co., Ltd.’s stocks, including goodwill, is 28,084 won (=1,123,364,543 ±40,600, and less than won).

Asset Value in balance sheet

2,594,573,411

balance sheet

1,498,646,886 won

Reservation Amount under Corporate Tax Act

3,006,580 won

Corporate Tax

35,648,363 won

Resident Tax

3,564,836 won

Total Assets

2,597,579,991

Total liabilities

1,537,860,085 won

Value of net assets 1,059,719,906 ( = 2,597,579,991- 1,537,860,085)

(3) The net profit and loss amount and the net profit and loss amount per share of ○○ corporation from 1998 to 2000 are as follows:

Classification

200 business year

199 business year

1998 Business Year

Net Profit and Loss Amount

395,279,784

51,602,005

135,367,663

Number of Business Year

12,000

5,000

5,000

Amount of net profit and loss per share

a 32,940

b 10,320

c 27,074

The weighted average amount

(aX3+bX2+C)/6

24,422 won

(4) The value per stock of this case under Article 54(1) of the former Inheritance Tax and Gift Tax Act is 244,220 won = 24,422 won (the weighted average amount of net profit and loss per share for the last three years) ¡À10% (the rate as prescribed by the Ordinance of the Ministry of Finance and Economy in consideration of the average interest rate formed in the financial market).

(5) The appraised value per share of the shares owned by the largest shareholder on the basis of the weighted average amount of net profit and loss per share of the instant shares calculated on the basis of the weighted average amount of net profit and loss for the last three years by ○○○ Co., Ltd. is KRW 293,064 [=24,220 X (1+0.2)];

(6) On March 22, 2000, Kim ○ purchased 5 shares of ○○○○ Co., Ltd. (the shares prior to the split-off of face value) among the shares of ○○○ Co., Ltd. (the shares prior to the split-off of face value) and five shares of ○○ Co., Ltd. (the shares prior to the split-off of face value) from her

(7) On August 16, 2002, the Plaintiff transferred the instant shares to 10,000 won per share.

(A) Evidence Nos. 1 to 14, 1 and 2, and the purport of the whole pleadings

D. Determination

According to Article 60 of the former Inheritance Tax and Gift Tax Act and Article 49 of the former Inheritance Tax and Gift Tax Act, where there is no actual value of stocks of an unlisted corporation, Article 63 of the former Inheritance Tax and Gift Tax Act, and Article 54 of the former Inheritance Tax and Gift Tax Act, only the actual value of stocks within three months before or after the evaluation base date may be recognized as

However, since the sale and purchase of ○○ Stock Co., Ltd. presented by the Plaintiff exceeds 3 months before and after March 19, 2001, which was the donation date of the instant shares, on March 22, 2000 and August 16, 2002, the sales and purchase price of the instant shares cannot be recognized as the market price of the instant shares.

Therefore, the defendant's disposition of this case, which assessed the value per share of the stocks of this case as 293.064 won by applying the supplementary evaluation method under Article 63 of the former Inheritance Tax and Gift Tax Act and Article 54 of the former Inheritance Tax and Gift Tax Act, is legitimate

3. Conclusion

Therefore, the plaintiff's claim is dismissed as ordered.

public official law, order of law,

The Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002)

Article 60 (General Principles, etc. of Appraisal)

(1) The value of property on which an inheritance tax or a gift tax is levied under this Act shall be the market price as of the date of commencing the inheritance or of donation (hereinafter referred to as the “date of appraisal”). In such cases, the value appraised by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63 (2))

(2) The market price under paragraph (1) shall be the price which is generally recognized as having been a transaction between many and unspecified persons and shall include the expropriation and public auction price, appraisal price, and others which are recognized as the market price under conditions prescribed by Presidential Decree.

(3) In applying the provisions of paragraph (1), where it is difficult to compute the market price, the assessed value shall be based on the methods prescribed in Articles 61 through 65 in consideration of the kind, scale, transaction status, etc. of the relevant property

(4) omitted.

Article 63 (Appraisal of Securities, etc.)

(1) The appraisal of securities, etc. shall be made according to the following methods:

1. Appraisal of stocks and investment shares:

(b) omitted

(c) Stocks and equity shares not listed on the Korea Stock Exchange other than those under item (b) shall be appraised according to the method prescribed by the Presidential Decree in consideration of the assets and profits

2. Omission;

(2) omitted.

(3) In applying the provisions of paragraphs (1) 1 and (2), 20/100 of the value appraised under the provisions of paragraphs (1) 1 and (2) of this Article shall be added to the value of stocks and equity shares (excluding the stocks and equity shares of a corporation that has losses under the provisions of Article 14 (2) of the Corporate Tax Act continuously from the business year before the business year including the appraisal base date to the business year under the provisions of Article 14 (2) of the same Act) of the largest shareholder, largest investor, and stockholders or investors in a special relationship with the largest shareholder, etc. (hereafter in this paragraph, referred to as the "largest shareholder, etc.") as prescribed by the Presidential Decree, but where the largest shareholder, etc. holds in excess of 50/100 of the total number of stocks

(4) omitted.

Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17459 of Dec. 31, 2001)

Article 49 (Principles for Evaluation, etc.)

(1) The term "those recognized as the market price as prescribed by Presidential Decree, such as the expropriation or public sale price, appraisal price, etc." in Article 60 (2) of the Act means, in cases of sale, appraisal, expropriation or public auction (referring to an auction under the Civil Procedure Act; hereafter the same shall apply in this paragraph) or public auction during a period of not more than six months (three months in the case of donated property) before or after the standard date of appraisal, it means the amount verified

1. The transaction value, if any, of the relevant property: Provided, That the transaction value is deemed objectively unfair with a person with a special relationship provided for in Article 26 (4) shall be excluded herefrom;

2. Not more than the omission;

Article 54 (Appraisal of Unlisted Stocks)

(1) Stocks and investment shares not listed on the Korea Stock Exchange under Article 63 (1) 1 (c) of the Act (hereafter in this Article, referred to as “non-listed stocks”) shall be the value appraised by the following formula: The value per share = The weighted average amount of net profits and losses for the latest three years per week ± the rate prescribed by the Ordinance of the Ministry of Finance and Economy in consideration of the average interest rate formed in the financial market (hereinafter referred to as “net profit and loss

(2) Where the value of unlisted stocks appraised under paragraph (1) falls short of the value appraised by the following formula, the value shall be the value appraised by the following formula:

The value per share = The net asset value of the corporation ± Total number of outstanding stocks (hereinafter referred to as “net asset value”).

(3) In applying the provisions of paragraphs (1) and (2), where a corporation that has issued stocks or investment shares under Article 63 (1) 1 (c) of the Act owns stocks or investment shares not more than 10/100 of the total number, etc. of issued stocks of a corporation that has issued other unlisted stocks, the assessment of the other unlisted stocks may be based on the acquisition value provided for in Article 74 (1) 1 (e) of the Enforcement Decree of the Corporate Tax Act notwithstanding the provisions of

(4) In applying the provisions of paragraph (2), “total number of issued stocks” shall be based on the total number of issued stocks as of the evaluation base date.