Seocho 2010west 1192 (Law No. 106.04)

Transfer of forest trees shall be subject to taxation of capital gains tax.

It is difficult to view that the Plaintiff continuously and repeatedly cultivated forest trees or engaged in forestry as part of an independent business for profit as part of the business, and it is difficult to view that the Plaintiff transferred the forest trees of forest as part of the forestry as transfer income tax, the transfer of forest trees is subject to taxation of transfer income tax.

2010Gudan1738 Disposition of revoking capital gains tax

CHAPTER A

○ Head of tax office

June 17, 201

July 15, 201

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing KRW 466,427,960 on the Plaintiff on September 8, 2009 is revoked.

1. Details of the disposition;

A. On December 31, 2004, the Plaintiff owned 49 m35,365 m2, a m39 m2,074 m2, a m200,000 m2,000,000,000 m2,000,000 m2 (hereinafter collectively referred to as “the instant forest”). On June 4, 2008, the Plaintiff transferred the instant forest to 3,220,000 m2,000.

B. On September 10, 2008, the Plaintiff reported and paid KRW 1,286,711,400 as global income tax by treating the remaining KRW 1,286,068,40 as business income after deducting the standard market price of forest land from the total transfer value pursuant to Article 51(8) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22034, Feb. 18, 2010) on the ground that income from the transfer of forest trees among the incomes from the transfer of forest land in this case constituted business income and not subject to capital gains tax. On the 30th of the same month, the Plaintiff reported and paid KRW 184,418,590 as global income tax calculated by setting the transfer value as the standard market price.

C. On September 8, 2009, the Defendant: (a) premised on the premise that the transfer of forest land and forest trees together are classified into “business” in order to calculate the transfer income from the transfer of forest land and the business income from the transfer of forest trees; (b) on the ground that there is no evidence to acknowledge that the transfer of forest trees among the transfer subject matter of this case was traded with business feasibility, the income from the transfer of forest trees cannot be deemed as business income from the transfer of forest trees; and (c) accordingly, the Defendant corrected and notified the total amount of income from the transfer of forest land of this case as transfer income tax of 466,427,960 won for the year 208 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 4, Gap evidence 10-1, 2, Eul evidence 1-3, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The instant disposition imposing capital gains tax on the instant forest land, which constitutes business income for the following reasons, is unlawful.

① Article 19(1) of the Income Tax Act lists income equivalent to business income and provides for income generated from the "forest" in subparagraph 1, and Article 29 of the Enforcement Decree of the Income Tax Act invokes the scope of business among forestry business (0201). One of the "Korea Standard Industrial Classification where Article 29 of the Enforcement Decree of the Income Tax Act provides for growing and protecting trees in forests to produce forest trees" (0201). The forest land in this case is owned and managed as the Plaintiff's landscape, which is the forest land owned and managed by the National Treasury and its owner's own expenses from 1942 to 1983. Since it is possible for the Plaintiff to determine whether the forest land in this case has been transferred with a management E after its succession, it is possible for the Plaintiff to use it as a business income from growing trees for a period of not less than 0 years, such as growing trees or growing trees for a period of not less than 4 years from 1942 to 1983.

(2) From among the forest land of this case, the E was growing down the seedlings of 1,200 saws, 100 saws, 100 saws, and 100 saws, from among the forest land of this case. At the time of the transfer of forest land, the Plaintiff was working for the seed and seedling production business (0201) for forestry in the Korean Standard Industrial Classification through E through E, since the Plaintiff was in possession of the above forest trees at the time of the transfer of forest land, and was in excess of all the buyers.

③ Income generated from cutting or transfer of trees in a forest land, the afforested period of which exceeds five years, was prescribed as forest income pursuant to Article 23(1) of the former Income Tax Act (amended by Act No. 8144, Dec. 30, 2006). Since the amended Income Tax Act stipulates that forest income is changed into income generated from forestry among business income, forest income, and thus, forest trees in the forest land in this case, the afforested period of which exceeds five years, shall be deemed business income.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) As to the Plaintiff’s assertion

According to Articles 4(1)1 and 3, 19(1)1, and 94(1)1 of the Income Tax Act, income generated from forestry falls under business income which is subject to global income tax, and income generated therefrom shall be subject to transfer income tax unless a transfer of land becomes a real estate sales business, etc. Meanwhile, Article 51(8) of the Enforcement Decree of the Income Tax Act provides that income generated from the transfer of forest trees shall not be included in the calculation of total income when calculating the amount of income from the business where the forest trees are cut down or transferred along with the forest land. Thus, where the forest land is transferred along with the forest land, the income from the transfer of the forest land shall not be included in the calculation of total income amount. Accordingly, in order to separate transfer income from the transfer of the forest land and the business income from the transfer of the forest trees, the forest land shall not be included in the calculation of total income from the transfer of the forest land and the forest land shall not be included in the calculation of total income amount.

Considering the circumstances of Gap's health class, Gap's evidence Nos. 4, 8, 10, Eul's evidence Nos. 4 and 5 (including the above numbers), and each statement and video Nos. 1 through 6 (1) as to the instant case, each statement and video Nos. 1 through 3, 5, 8, and 11 (including these numbers) cannot be deemed to have continuously and repeatedly cultivated or engaged in forestry as part of a project independent in an independent position for profit-making purposes, and it is difficult to view that the Plaintiff transferred the forest trees of the instant case as part of the forestry. Accordingly, it is reasonable to deem that the entire income accrued from the instant transfer of the forest land is subject to capital gains tax because the transfer of the constituent parts incidental to the transfer of the forest land does not fall under the full exchange of the project, such as the forestry, and merely constitutes the transfer of the constituent parts incidental to the transfer of the forest land. The Plaintiff's above assertion is without merit.

1) Until the Plaintiff acquires and transfers the forest of this case, the Plaintiff reported the registration of business under Article 168(1) of the Income Tax Act, reported the comprehensive income tax following the separate collection and transfer of forest trees, cut trees and sold them, and there seems to be no fact that the Plaintiff obtained the authorization and permission of the competent authority for cutting down the forest of this case in the forest of this case.

2) The forest of this case is not registered with respect to the forest of this case, and there is no record of forest management (forest management and forestation) confirmed by the competent authority.

3) Upon filing an inheritance tax return, the Plaintiff did not report the instant forest trees as inherited property separate from the instant forest land.

4) In transferring the instant forest land, the Plaintiff did not separate the transfer value of the forest land and the transfer value of the forest land from the transfer value. In addition, the sales contract provides that “the seller renounces the superficies.” The form and content of the contract seems to be contrary to the Plaintiff’s assertion that the transfer of the forest land among the instant forest land is the conversion of the forestry.

5) Trees are originally fixtures attached thereto and, in principle, they cannot be the objects of things independently. However, a group of trees registered under the Standing Timber Act shall be treated as independent real estate regardless of the ground land, i.e., a group of trees not registered as above, and a group of trees not registered as above may be the object of transaction as independent real estate if they have the method of public announcement, i.e., the method of public announcement., a group of trees not registered as above, may be the object of transaction as independent real estate. The Plaintiff appears to have failed to have the said method of registration or public seal as to forest trees in the forest of this case. Thus, the forest trees are parts of the forest of this case, and their parts shall be

6) The Plaintiff applied for the said E as a witness on the second date for pleading, and the examination date was set, but the Plaintiff withdrawn the application for witness on the examination date.

(2) As to the plaintiff (2)

Even based on the basic facts of the Plaintiff’s assertion, it is difficult to see that the Plaintiff engaged in the production and production business for forestry on its own account through EE, and there is no other evidence to acknowledge it, and the Plaintiff’s above assertion

(3) As to the Plaintiff’s assertion

In the revised Income Tax Act of the plaintiff's assertion, there is no provision that regards income generated from the cutting or transfer of trees in a forest land which has been afforested for not less than five years as business income, or that income generated from forestry among business income after the revision of forestry income before and after the amendment, the interpretation of the plaintiff's laws and regulations cannot be adopted merely by an excessive analogical interpretation, and therefore the plaintiff's above assertion is not reasonable (in conclusion, in order to regard the part of income generated from the transfer of forest land in this case as business income from the transfer of forest land in this case as business income without any need to further examine it, the plaintiff engaged in forestry by continuously and repeatedly in a profit-making independent position as part of the project, such as growing the forest trees in this case and transferring the forest trees in this case as part of the forestry business such as the growing business, etc., but the above case is not applicable to this case).

3. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.