Determination on impossibility of recovering claims for payment in calculating gains on transfer

Where the development project of land becomes impossible due to the non-establishment of access roads and the successful bid, etc., and profit is made due to joint development of land, if the fulfillment of the terms and conditions became impossible, a claim for the purchase-price already paid has become impossible

Article 95 of the Income Tax Act (Transfer Income Amount)

2012 old-gu 4664 Revocation of Disposition of Imposing or correcting capital gains tax.

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AA Head of the Tax Office

September 13, 2013

October 4, 2013

1. The Defendant’s disposition of correction of KRW 000 (including additional tax) of the transfer income tax for the year 2007 for the Plaintiff on December 27, 2010 shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

"A. The plaintiff, on December 29, 2004, acquired 26,975 square meters of Gyeonggi-do ○○○-○○○, Gyeonggi-do ○○○○○, ○○, ○○-○, 200, and 28 square meters (divided into 2009, 100-10 and 28 square meters; hereinafter the same shall apply) and completed the registration of ownership transfer to BB on November 28, 2007." However, on May 31, 2008, the plaintiff filed a final return on the tax base of KRW 000,000 based on the standard market price, but the transfer of the above above above above ground trees was not paid the amount of tax, and the defendant filed a claim for correction of the transfer income tax on the ground that it was impossible to collect the transfer income tax and the transfer income tax on the ground that it was an impossible claim for correction from the Seoul High Court 200,000,000 won.

C. On December 27, 2010, the Defendant issued the instant disposition to correct and notify the Plaintiff of the transfer income tax of KRW 000,000 for the transfer of the instant land at KRW 0 billion. The Plaintiff filed an appeal with the Tax Tribunal on November 24, 201, but was dismissed on November 24, 201.

Facts that there is no dispute over the basis of recognition, entries in Gap 1, 3, and 5, and the purport of the whole pleadings

2. The plaintiff's assertion

A. Since the Plaintiff did not sell the instant land to BB to 0 billion won, the Plaintiff’s purchase and sale, which is the grounds for registration, is a false conspiracy, and the sale price does not exceed 0 billion won.

나. 원고와 CCC은 DDD에게 사기를 당하여 2억원만 받고는 경락대금만 12억 9,000만원에 이르는 이 사건 토지의 소유권을 잃어버리고도 형사기소까지 된 반면 DDD은 남의 토지를 무상으로 받아 이를 담보로 대출받은 12억원 중 대출관련비용과 CCC에게 지급한 돈을 제외한 나머지 돈 약 5억 3,000〜5억 4,000만원을 사업자금 등으로 사용하고도 무혐의처분을 받은 점, 원고와 CCC이 이 사건 공동사업약정에 기하여 DDD,BBB을 상대로 제기한 민사소송에서 패소한 점, DDD과 BBB은 그 명의로 부동산이나 금융자산을 전혀 소유하고 있지 않는 점 등을 감안하면, 가사 이 사건 토지 매매대금이 00억원이라 하더라도 잔금인 0억원을 회수하는 것이 불가능하다.

C. Although the Plaintiff and CCC shared the purchase price of 1/2 and acquired the instant land from BB, the sales contract was prepared in the Plaintiff’s sole name. Thus, if the profit accrued from the instant land, if the profit accrued, the transfer income tax shall be imposed equally on the Plaintiff and CCC under the principle of substantial taxation.

D. Since CCC has disbursed KRW 00 million in relation to the consent to access roads, the above billion won should be deducted as necessary expenses even if any profits are accrued to the Plaintiff and CCC.

3. Whether the disposition is lawful;

(a) Facts of recognition;

(i) joint project agreements and ownership transfer registration;

- On November 20, 2004, the Plaintiff and CCC jointly prepared funds, purchased the instant land in KRW 435,000,000, and completed the registration of ownership transfer under the Plaintiff’s sole name on December 29, 2004.

- CCC, while developing and selling the instant land as the site for electric source between DD and DD, on November 26, 2007, as the following joint project arrangements (hereinafter “non-instant co- arrangements”):

Article 1 (Purpose) The purpose of this case is to jointly develop the land of this case and to create profits therefrom on the basis of mutual trust and good faith between DD and CCC.

Article 2 (Financial Loans) CCC agrees to obtain loans of one billion won or more on the security of the instant land and provides necessary documents therefor.

Article 3 (Transfer of Ownership) (1) CCC shall transfer its ownership to a person designated by DDR.

(2) DD shall transfer its ownership and at the same time establish a provisional registration of the right to claim ownership transfer to a person designated by CCC.

Article 4 (Use of Loans) (1) DDD shall create a passbook in the joint name of each person designated by DD and CCC for loans, deposit them first, and use them through mutual consultation as necessary.

② Loans shall be repaid 300 million won for the term loans to the Common Afforestation Processing Fisheries Cooperatives (hereinafter referred to as the "Water Cooperative"), shall be paid 300 million won for the expenses related to the approval to use access roads, and shall be paid 300 million won for the land owner. The CCC shall first lend 100 million won out of the agreed amount to 300 million won for the contract deposit, and DDR shall return the above 100 million won for the new construction of DD's residential facilities (Seoul, Nam-gu, Seoul, 2, 9-1 site 548.8 square meters, hereinafter referred to as the "Soldong residential facilities") within one month after the transfer of ownership, and the balance of loans shall be paid 100 million won for the financial interest and related expenses, and 100 million won for the initial operation expenses.

(2) Where real estate is sold through development, the total amount of land to be additionally paid shall be settled in installments when it is sold through development.

(3) Of loans, 300 million won in repayment of the Suhyup Loans and 300 million won in payment to landowners shall be settled as land price. In other words, the sum of 300 million won in repayment of the Suhyup Loans and 300 million won in agreement to be paid to landowners shall be 1.6 billion won in land price.

Article 6 (Sale) ① DD and CCC shall decide to adjust the proceeds of sale through mutual consultation.

Article 6 (Transfer Income Tax) ① DDR shall be paid in full at the expense of DDR in connection with the transfer income tax imposed on the present owner.

(2) The CCC shall settle the capital gains tax borne by DD as expenses when settling accounts for expenses for the future development.

③ At the same time when transferring the ownership of the instant land, DD shall first deposit capital gains tax that may be incurred to the present owner in the utility tunnel, within 30 days after the transfer of ownership, and pay it within two months.

Article 7 (DD and CCC shall have 50% equity interest in each of the proceeds from the development of the land of this case, except the land price and the total costup of the development.

Article 10 (Entry Roads) The CCC shall be responsible for the written consent and seal impression from the owners related to access roads along with a consent agreement for use which is essential for the construction of roads.

The project agreement was concluded.

2) Whether the joint project agreement is implemented

- The Plaintiff prepared a sales contract to sell the instant land to his wife Kim Jong-hee designated by DD on November 27, 2007 in accordance with the instant joint venture agreement, and completed the registration of ownership transfer in the name of BB on November 28, 2007, and received 200 million won from CCC.

- On November 28, 2007, DD created a right to collateral security with a maximum debt amount of KRW 0 billion with respect to the instant land, and from among the loaned by N&C Mutual Savings Bank, KRW 0 billion with a loan of KRW 0 billion from the bank fee, KRW 300 million with a consent fee of KRW 300 million with respect to land owners, and KRW 300 million with a consent fee of KRW 300 million with respect to land owners, CCC paid KRW 200 million with the aforementioned consent amount of KRW 300 million with the remainder of KRW 100 million with the representation of DD as a deposit for sale (Article 4(2) of the Agreement).

- DD paid KRW 000 to the Jung-gu Seoul Metropolitan Government Office for the exemption of the obligation of facilities attached to the annexed parking lots in the old-dong neighborhood living facilities, aa is newly built, contrary to the contents of the instant joint project agreement (Article 4(2) of the Agreement) to repay loans of KRW 300 million to the Suhyup.

- Meanwhile, the instant land is a blind site with no access road. CCC received KRW 00,000,000 from DD to obtain a consent to use of the road from the owners of surrounding forests and fields around the instant land. However, in principle, the construction of access roads was not possible because the instant land is a preserved mountainous district, the use of the access road at the Gyeonggi-gu, Gyeonggi-do, which is to be used as the access road to the instant land, in principle, because the instant land is a preserved mountainous district, and accordingly, the development project under the instant joint project agreement was interrupted as soon

3) Auction of the land of this case

- On January 10, 2008, the World Trade Union applied for a voluntary auction on the basis of the registration of the establishment of the senior collective security (EE) established on the instant land (U.S. District Court Decision 2008Ma349, the appraised value in the above auction procedure) and DD only prepared and delivered to the Plaintiff and CCC a letter of performance to withdraw the above voluntary auction and to promise to cancel the first collective security after full repayment of the first collective security (the first collective security). However, on August 8, 2008, BB Savings Bank acquired ownership by winning the instant land at KRW 000 upon the successful bid.

4) The result of the relevant criminal procedure

Around September 30, 2008, DCC filed a criminal complaint against the Plaintiff and CCC with regard to the instant joint project agreement. Around September 30, 2008, DCC was a dead-end land, and even if CCC was in a situation where ○○○○○○○ ○○○○-Wol forest, which is to be established as the access road to the instant land, was unable to open the access road because it was preserved green belt, it was possible for CCC to open the access road additional to 1 billion won. On the other hand, CCC was indicted for fraud on May 29, 2009, but both the judgment of innocence was pronounced and finalized in the first and second instance court (U.S. District Court Decision 2009Da323, Suwon District Court Decision 2010No25777).

- On the other hand, on October 208, immediately after DDR filed a criminal complaint against it as a crime of fraud, CCC filed a complaint with the investigative agency on the charge of fraud and embezzlement. However, the Seoul High Court dismissed the application for adjudication on July 15, 2010 by the CCC on the non-prosecution disposition.

(v) the result of the relevant civil action

- The Plaintiff and CCC filed a claim with DD and CCC as Defendant under the Seoul Central District Court 2012Gahap6432, and ① the agreed amount set forth in the instant joint project agreement, but the obligation to pay DD’s land price of KRW 0 billion is a preferential distribution agreement created through the joint development of the instant land. Since DD’s joint development of the instant land did not properly proceed due to the opening of access roads and the third party auction, it was rejected on June 14, 2013 on the ground that DD, as a preliminary measure, arbitrarily used the instant land as the exemption expenses for facilities attached to the Madong Living Facilities, and had the obligation to terminate the said agreement and pay KRW 00,000,000,0000,000,000,0000,000,000,0000,000,000,000,000,000 won, on the ground that there was no evidence to deem that DD arbitrarily used the said money.

Facts that there is no dispute over the basis of recognition, each entry in A2-1, 2-2, A5 through 27 (including each number, if any) and the purport of the whole pleadings.

B. Determination

(1) As to the assertion of false conspiracy

According to the facts of recognition, the Plaintiff and CCC transferred the ownership of the instant land according to the instant joint project agreement, and DD has developed and sold it as a site for electric source housing, and paid the land price in the process of performing the agreement. During the process of implementing the agreement, it can be known that the sales contract on the instant land was prepared and transferred to BB designated by DD and registered the transfer to BB. Thus, even though the sales contract on the instant land was not a mere sales contract itself, it cannot be concluded that the instant joint project agreement was included in the contents of the instant joint project agreement and transferred the name for its implementation, and thus constitutes a false declaration of conspiracy.

(2) As to the assertion that payment claims cannot be recovered

On the other hand, the Income Tax Act, even if there is no actual income, shall be deemed as realizing the right to taxable income when the right which is the cause of the income has become final and conclusive. However, even if a claim that is the cause of the income has occurred, if it is objectively evident that the claim subject to the income becomes impossible to recover due to the debtor's bankruptcy, etc. and that there is no possibility of realizing the income in the future, the income tax on the economic benefits shall lose its premise. Such income cannot be imposed on taxable income. However, the issue of whether the claim is impossible to recover shall be determined by an objective assessment method in light of the debtor's financial condition and payment ability by taking into account the specific transaction details and the subsequent circumstances (see, e.g., Supreme Court Decision 200Du7176, Dec. 26, 2003). Since it is reasonable to view the non-payment of the claim to the plaintiff as a joint development of the land in this case, it is reasonable to view that the plaintiff was not able to receive the purchase price under the social norms.

Therefore, the disposition of this case by the defendant on a different premise is revoked in an unlawful manner.

(3) As long as the instant disposition is revoked, the remainder of the Plaintiff’s assertion is no longer examined.

4. Conclusion

Therefore, the plaintiff's claim is justified.