It is reasonable to deem that the Plaintiff received KRW 300 million as a donation from the Deceased, not from the claim and the payment of interest thereon.

Without any explanation as to the reasons for the letter of undertaking, it is only stated to the effect that the deceased promise to pay KRW 100 million to the Plaintiff and that the land of this case is stored in the event that the deceased died during the period of payment. The above statement alone is difficult to view that the deceased was liable for the loan to the existing plaintiff, and that there was a promise for payment in kind with respect to the land of this case for the repayment thereof.

Article 2 of the Inheritance Tax and Gift Tax Act

2013Guhap370 Revocation of Disposition of Imposition of Gift Tax

00

00. Head of tax office

November 26, 2014

on 14, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of gift tax of KRW 37,137,60 on April 5, 2012 is revoked.

1. Details of the disposition;

(a) Circumstances on the payment of KRW 300 million;

1) On May 20, 2004, the registration of ownership transfer was completed in the name of the CCC of the Plaintiff on May 20, 2004 with respect to the land of 00 dong-dong 000 Do-dong 000 Do-dong 000 Do-dong (hereinafter “instant land”).

2) On July 2, 2008, AAA filed a lawsuit against CCC, BB, and HH, a parent of CCC, against Jeju District Court 2008Gahap695 (hereinafter referred to as "AA to perform the procedure for registration of cancellation of ownership transfer of the instant land, etc., and to pay KRW 159,00,000 (hereinafter referred to as "the instant mediation"), (AA was used as brain stroke around 2001 and was sentenced to an incompetent on May 6, 2008; (a) the said lawsuit was brought by GGGG, a child of AA, as a guardian, to participate in the said lawsuit as a conciliation intervenor and the conciliation was established on March 27, 2009 (hereinafter referred to as "the instant conciliation"); and (b) the content of the instant conciliation related to the instant case are as follows.

1. (a) BB shall pay to the Plaintiff KRW 300,000,000 until June 30, 2009. If BB fails to pay the said amount by the payment date, then the unpaid amount shall be paid by adding the damages for delay at the rate of 20% per annum from the day following the date of payment to the day of full payment. This is approximate.

2. The land of this case is confirmed to be owned solely by BB. The land of this case is omitted.

3) BB paid KRW 300 million to the Plaintiff on June 29, 2009 following the above conciliation, and AA died on August 30, 2010 (hereinafter “the deceased”).

(b) Disposition, etc.;

1) On April 5, 2012, based on the aforementioned protocol of mediation, the Defendant deemed that CCC donated KRW 300 million, out of the appraised value of the instant land 404,490,000, to the Plaintiff and the remainder to BB respectively, and imposed gift tax amount of KRW 71,794,800 on the Plaintiff.

2) On April 30, 2012, the Plaintiff filed an appeal with the Tax Tribunal on April 30, 2012. On August 20, 2012, the Tax Tribunal rendered a decision that “The Plaintiff re-examines whether the Plaintiff is the actual owner of the instant land, thereby correcting the tax base and tax amount according to the result.”

3) On October 2012, the Defendant conducted a reinvestigation and revised the gift tax amount of KRW 37,137,600 with the amount of gift tax imposed on the Plaintiff on October 31, 2012 by reducing KRW 37,137,60,00, on the basis of the letter of undertaking (hereinafter “instant letter of undertaking”) written by AA on August 9, 191, based on the following content, as follows: (a) on the ground that AA actually provided KRW 100 million to the Plaintiff, it shall be deemed that the Plaintiff provided the Plaintiff with KRW 37,137,600,000,000, which was reduced in the imposition of gift tax of KRW 71,794,80 as of April 5, 2012 (hereinafter “instant disposition”).

“AA promise to pay 100 million won in cash to the Plaintiff, and the method of transfer promises to transfer KRW 50 million from August 1991 to March 1992, and KRW 50 million to August 192, 192, from April 1992, to August 1992, to the bank account designated by the Plaintiff. If the name of AAA is different during the said period, “AA will return to the Plaintiff the amount of KRW 1728 (the instant land) prior to the Jeju-do Do-dong, Jeju-dong, Do-dong, and the amount already transferred to the Plaintiff shall be refunded to the FF who is the ASEAN.”

4) In response to the instant disposition, the Plaintiff filed an appeal with the Tax Tribunal on November 27, 2012, but the Tax Tribunal dismissed the appeal on March 7, 2013.

[Ground of recognition] Unsatisfy, Gap evidence 2, 4, 8, Eul evidence 1 to 6, 21

each entry, the purport of the whole pleadings, including branch numbers,

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

1) The Plaintiff had a monetary claim of KRW 100 million against the Deceased, and received the instant land in accord on the date of the instant conciliation in accordance with the accord and satisfaction promise at the time of the instant promise. Since the Plaintiff’s dualed BB, who took part in the said land for about 10 years, transferred it to BB in KRW 300 million on the same day, the Plaintiff’s transfer income tax was imposed on the said land, separate from the Plaintiff’s imposition of capital gains tax, the instant disposition made on a different premise is erroneous application of the tax items.

2) Even if the land of this case was not paid as a substitute payment, the Plaintiff received KRW 100 million from BB as the claim against the deceased as indicated in the instant promise and the payment of interest thereon from the end of August 1992 to the end of the instant conciliation period, and thus, the Plaintiff cannot be deemed to have received KRW 300 million as a donation.

3) In addition, even if the Plaintiff received a donation of KRW 300 million, the Plaintiff assumed hospital treatment expenses and funeral expenses of the deceased before the deceased died, and thus, should be deducted from the taxable value of donated property.

B. Determination

1) In the case of real estate, the ownership transfer registration should be made in the case of real estate because the Plaintiff’s claim is extinguished due to other payment in lieu of the original payment borne by the obligor. The Plaintiff did not have received the ownership transfer registration with respect to the land of this case from the Deceased or CCC, and the Plaintiff cannot acquire the ownership of the land of this case solely based on the agreement between the parties at the mediation date or the promise of this case. (Inasmuch as the Deceased is still alive at the mediation date, it cannot be deemed that the Plaintiff succeeded comprehensively to the ownership of the land of this case as a result of inheritance) unless the Plaintiff acquired the ownership by receiving the payment in lieu of the land of this case, the Plaintiff’s assertion on the different premise is without merit.

2) Next, it is reasonable to view that the Plaintiff received KRW 300 million from BB as a donation from the Deceased, not a debt of KRW 100 million against the Deceased and an interest thereon, in full view of the following circumstances acknowledged by comprehensively taking account of the facts acknowledged as above and the evidence adopted earlier. Accordingly, the Plaintiff’s assertion on this part is without merit.

① Without any explanation as to its reasons, the instant promise only indicates to the effect that, in the event that the deceased dies during the period of payment, the deceased promised to pay KRW 100 million to the Plaintiff, and that the land of this case is taken over. The mere fact of the foregoing statement alone, it is difficult to view that the deceased was liable for the loan to the existing Plaintiff, and that a promise was made for payment in substitutes with respect to the land of this case for repayment

② At the time of the instant conciliation procedure, the Deceased was unable to make a decision, and the time was passed after the conciliation decision was made, and the remaining family members except the Plaintiff (BB and HH, etc.) received a distribution of the deceased’s property and paid gift tax. The family members of the Deceased, including the Plaintiff, should be deemed to have actually received a distribution of the deceased’s property through consultation.

③ At the conciliation date of the instant case, the Plaintiff: (a) sought to distribute the instant land; (b) sought the concession of the said land on the ground that BB made a farmer’s death in the said land; and (c) paid KRW 300 million as the price. Therefore, the Plaintiff’s family members, such as BB, etc. paid KRW 100 million to the Plaintiff with the intent to substitute for repayment of the Plaintiff’s KRW 100 million and interest thereon.

④ According to the Plaintiff’s assertion, if the Plaintiff received reimbursement of the principal and interest on the deceased, the interest income tax on the interest appears to impose more tax on the Plaintiff, and there is no fact that the Plaintiff reported the interest income tax.

3) Lastly, according to the Plaintiff’s written confirmation (Evidence A No. 10), even if the Plaintiff assumed the hospital treatment expenses and funeral expenses of the deceased, this is not a kind of deduction from donated property, and the Plaintiff’s assertion on this part is without merit.

3. Conclusion

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