early 2010west0974 (Law No. 19, 2011)

In light of the shape of a road or the current use thereof, there is no property value at the time of commencement of inheritance.

In light of the shape of a road or the current use of a road, it is difficult to deem that there was property value as at the time of commencing the inheritance because it seems impossible in reality to use a road exclusively or for any other purpose by restricting the passage of residents.

2011Guhap2125 Revocation of Disposition of Levying Inheritance Tax

Jung 10 others

Head of Eastern Tax Office

January 17, 2011

February 2, 2012

1. All of the plaintiffs' claims are dismissed.

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

The disposition of imposition of inheritance tax of KRW 474,940,110 against the plaintiffs on December 11, 2009 by the defendant shall be revoked.

1. Details of the disposition;

A. Upon the death on December 17, 2000, the Plaintiffs, the inheritors, on June 17, 2009, assessed the value of 2.3 square meters in the roads, 2.3 square meters in Seoul, Jung-gu, Seoul, and 00-00 (hereinafter referred to as “the roads”) on June 17, 200, as well as the value of 2.3 square meters in the roads, 2.3 square meters in 00-00, 2007.6 square meters in 200-0, 504.8 square meters in 00-0, 84 square meters in 110.7 square meters in 00-00, 41.6 square meters in 00-00, 100-00, 200-00 square meters in total, and 200-4 square meters in the forest and fields in the forest of this case (hereinafter referred to as “the forest of this case”) and 200-00-000 square meters in the forest and fields.

B. After the Seoul Regional Tax Office assessed the value of the instant road and forest as a result of the inheritance tax investigation against the Plaintiffs and reported inheritance tax by excessively assessing the value of the instant road and forest, and assessed the value of the instant road as KRW 0,323,000,000 from the value of the inherited property pursuant to General Rule 61-504 of the Inheritance Tax and Gift Tax Act, and assessed the value of the instant forest as a publicly assessed individual land price rather than the compensation value, and notified the Defendant of taxation data regarding the reduction of KRW 1.86,00,000 from the value of the inherited property.

C. On December 15, 2009, based on the taxation data notified as above, the Defendant decided and notified the Plaintiffs of KRW 474,940,110 of inheritance tax (hereinafter “instant disposition”). On February 5, 2010, the Defendant rejected the application for payment in kind on the ground that there is no property value for the instant road. On February 5, 2010, the Defendant denied the value assessed as the compensation value for the instant forest, and allowed the application for payment in kind by recognizing only the value assessed as the publicly assessed individual land price as the payment in kind.

D. On February 12, 2010, the Plaintiff Company B rejected the instant disposition and filed an appeal with the Tax Tribunal, but the Tax Tribunal dismissed the said appeal on May 19, 201.

[Ground of recognition] Facts without dispute, Gap 1, 2 evidence, Eul 1, 3 through 5 (including each number), and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

For the following reasons, the Defendant’s disposition that assessed the value of the instant road as zero won, and assessed the value of the instant forest as a publicly assessed individual land price, not the compensation value, was unlawful.

1) Since 190, the officially assessed individual land price of this case has been published every year, and the officially assessed individual land price of this case has increased continuously for the last ten years, and the officially assessed individual land price of neighboring areas including the road of this case has reached about 500,000 won according to the New Town Development Plan of Seoul Special Metropolitan City, and the officially assessed individual land price of this case has been used as tax base such as property tax, etc. As for roads with property value as well as roads with no property value, the officially assessed individual land price is calculated and publicly announced, while the roads with no property value are calculated and publicly announced, and acquisition tax and registration tax are paid as tax base at the time of the registration of inheritance of the road of this case. In light of the fact that the plaintiffs paid the acquisition tax and registration tax to the plaintiffs, it is unlawful to impose the inheritance tax calculated by the defendant by evaluating the value of the road of this case as 0 won on the plaintiffs, since most of the inherited property is forced to pay the inheritance tax to the plaintiffs as real

2) Among the instant forests, mountain 12-10 forests were divided from the instant expropriated land due to expropriation. The forest land of mountain 12-2 is adjacent to the area of 12-7 forest land and 880 square meters adjacent to the area of 00 square meters in Seongbuk-gu Seoul, Seoul, the land located under the Seoul Special Metropolitan City Mayor. The forest of this case is identical or similar to the area, location, land category, purpose, and officially announced value of the land, including the instant expropriated land. The said expropriated land was expropriated from about 10 months before the commencing date of the instant inheritance ( December 17, 2008), while there was no price fluctuation from the individual land price of the instant forest of this case until the commencing date of the inheritance, the individual land price of the said expropriated land has increased continuously, so it is sufficient to evaluate the value of the said expropriated land as the compensation value of the said expropriated land under the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 2042, Feb. 18, 2010).

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) The instant road has been published prior to the commencement date of the instant inheritance, and the land category on the public record is all the roads, and its current status is a narrow sloping road surrounded by the site of several lots of houses, which is commonly used by residents.

2) The competent administrative agency did not impose the property tax on the instant road. On the other hand, on August 31, 2009, the director of the Seoul Regional Tax Office sent a public notice demanding confirmation of the land compensation plan related to the instant road to the head of Jung-gu Seoul Metropolitan Government Office. On September 2, 2009, the response was received on September 2, 2009 that there was no land compensation plan related to the instant road.

3) The annual individual land price of the forest of this case and the land expropriated adjacent thereto are as listed below.

4) Among mountain 12-3 forest land and 9,008 square meters, 2,500 square meters and 12-7 forest land and 911 square meters in mountain was expropriated by the Mayor of Seoul Special Metropolitan City on February 2, 2008. The remaining 6,508 square meters of forest land, excluding the area expropriated among forest land 12-3 forest land in mountain above 12-3, was altered to 12-10 forest land after expropriation. Of mountain 12-3 forest land and 2,500 square meters, 1,821 square meters in mountain was expropriated to 472,500 square meters per square meter, and the remaining 679 square meters in forest were expropriated to 156,000 square meters per square meter, and forest land in mountain 12-7 was expropriated to 4447,500 square meters per square meter.

5) The details on the public register of the land expropriated in this case and the forest land in this case are as follows.

6) The land to be expropriated in this case is the land dealing with a perfect slope toward the south, or the land in mountain 12-10 is the land in the shape that deals with a slope higher than the trend located above the land to be expropriated in this case, and part of the land in mountain 12-2 is actually being used as the road. The forest land in mountain 12-2 is located between ditches and the land in mountain 100 meters away from the land to the south, and is a slope to the southwest. Meanwhile, the area of the land to be expropriated in this case and the forest in mountain 12-7 is adjacent to the area over which each lot is located (which seems to have school, apartment, housing, etc.).

7) Details of the fact-finding results by the Minister of Land, Transport and Maritime Affairs, Seoul Special Metropolitan City Mayor and the Seoul Special Metropolitan City Mayor

A) Pursuant to Article 11 of the Public Notice of Values and Appraisal of Real Estate Act and Article 14 of the Enforcement Decree of the same Act, the officially assessed individual land price is determined and constructed as of the officially announced land price every year after deliberation by the Si/Gun/Gu Evaluation Committee on Real Estate for the imposition of development charges and other purposes prescribed by other Acts and subordinate statutes, and provided it to the relevant administrative agencies, etc., but exceptionally, the officially assessed individual land price may not be determined and publicly announced for land (limited to the land for public use in the case of national and public land) which is not subject to the imposition of land preservation charges, farmland preservation charges, development charges, etc. selected as the standard land price, land which is not subject to the imposition of national or local taxes.

B) According to the guidelines for the investigation and calculation of the officially assessed individual land price in 2011, the road for which the officially assessed individual land price is calculated is stipulated as the land for which the head of the Si/Gun/Gu has decided and publicly announced the officially assessed individual land price after consultation with

C) The ratio of the roads calculated by the officially assessed individual land price among the entire roads in the Jung-gu Seoul Metropolitan Government where the instant roads are located is about 88.5%.

[Reasons for Recognition] The facts without dispute, Gap 1, 3, 4, 7, Eul 2 through 5 (including each number), each entry and video, the Minister of Land, Transport and Maritime Affairs, the Mayor of Seoul Special Metropolitan City, and the head of Jung-gu Seoul Special Metropolitan City, the purport of the whole arguments, and the purport of the whole arguments.

D. Determination

1) Determination on the first argument

A) Article 60(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “former Inheritance Tax and Gift Tax Act”) provides that the value of the property on which the inheritance tax is levied under this Act shall be deemed to be the market price as of the date on which the inheritance commences. In applying the provisions of Article 60(3) of the former Inheritance Tax and Gift Tax Act, where it is difficult to calculate the market price in the application of the provisions of Article 60(1) of the former Inheritance Tax and Gift Tax Act, it shall be deemed that the assessed value is based on the method under Articles 61 through 65 of the former Inheritance Tax and Gift Tax Act, taking into account the type, size, transaction situation, etc. of the pertinent property. Accordingly, Article 61(1) of the former Inheritance Tax and Gift Tax Act provides that where it is difficult to calculate the market price of the land, it shall be deemed that it is difficult to calculate the market price by the publicly assessed individual land price.

However, Article 60 of the former Inheritance Tax and Gift Tax Act provides that the value of inherited property shall, in principle, be calculated based on the market price as of the commencement date of inheritance. However, the general rule of the Inheritance Tax and Gift Tax Act provides that the value of inherited property shall be calculated based on the market price as of the commencement date of inheritance, except where a large number of unspecified persons have property value, such as where the market price of the commencement date of inheritance is confirmed by compensation price, etc., but the value of the inherited property is zero, regardless of the land category in the public register. The purport of the above legal principle is to exclude exceptional cases where inherited property is actually provided by a large number of unspecified persons as at the time of commencement of inheritance, such as where the market price of the commencement of inheritance is confirmed by compensation price, etc., and thus, it cannot be deemed that the value of inherited property is actually valuable as at the time of commencement of inheritance. Thus, it can be recognized that the above general rule of the inheritance tax is reasonable, and thus, it can be considered as the basis for calculating the market price at the time of commencement of inheritance for public use by many unspecified persons (see Supreme Court Decision 98Du8360).

B) In light of the above legal principles, although the officially assessed individual land price was publicly announced on the road of this case, the plaintiffs paid acquisition tax and registration tax at the time of inheritance registration of the road of this case, and there are circumstances that the plaintiffs are expected to gain actual profits from the road of this case according to housing redevelopment projects in the future, the road of this case was officially used by the residents from the previous road to the present day, and the plaintiffs or the plaintiffs did not collect usage fees for the road of this case from the residents passing through the road of this case. In addition, in light of the shape or use status of the road of this case, it would be impossible for the plaintiffs to exclusively use the road of this case by restricting the above residents' passage or demand usage fees, or to use the road of this case for purposes other than the road of this case. Since there is no evidence to deem that the road of this case had real property value, such as confirmation of market value at the time of commencing the inheritance of this case by compensation price, etc., it is difficult to view that the road of this case had property value at the time of commencing the inheritance.

C) Therefore, in rendering the instant disposition, the Defendant’s evaluation of the value of the instant road at zero won by deeming that there is no property value of the instant road is lawful. The Plaintiffs’ assertion that the value of the instant road should be assessed as the publicly assessed individual land price on a different premise

2) Determination on the second argument

A) Article 60 (2) of the former Inheritance Tax and Gift Tax Act provides that the market price as of the date of commencing the inheritance (hereinafter referred to as "the date of commencing the inheritance") shall be the value of the property on which the inheritance is assessed and which is usually recognized to be established if a transaction is made freely between many and unspecified persons; and the main sentence of Article 49 (1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "the value of the property which is recognized to be the market price under the conditions as prescribed by the Presidential Decree, such as the expropriation, public sale price, and appraisal price" under Article 60 (2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act shall be the value of the property under each of the following subparagraphs (hereinafter referred to as "sale, etc.") within 6 months before and after the date of appraisal (hereinafter referred to as "the date of appraisal") and the value of the property under each subparagraph of Article 60 (1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act shall be the same or similar value under each subparagraph 16 (the proviso shall be the compensation value under each subparagraph 1).

In full view of the above provisions, the market value as of the commencement date of inheritance of inherited property is generally recognized as a case of free transaction between many and unspecified persons, and where the inherited property or its size, location, use and items are identical or similar to those of the inherited property in question within the evaluation period and the compensation value is determined, the compensation value shall also be included, and even if the inherited property is expropriated during the period not falling under the evaluation period, if there is no special reason to change the price during the period from the evaluation basis date to the date the compensation value is determined by expropriation, the compensation value may be accepted within the evaluation period after consultation with the evaluation review committee and included in the compensation

Therefore, as claimed by the plaintiffs, in order to evaluate the value of the forest of this case as the compensation value for the neighboring land expropriated ten months prior to the commencement date of the inheritance of this case, it should be assumed that the area, location, use and category of the forest of this case and the surrounding land are identical or similar.

B) According to the purport of the above facts and arguments, since both the forest of this case and the neighboring lands including the land expropriated in this case are forest of sloping form, not land, and their form, area, location, degree of utilization, slope direction and gradient, and category (Seoul OOdong 00 land is miscellaneous land) are not identical or similar to each other, the value of the forest of this case cannot be assessed as compensation value for neighboring lands which were expropriated during the period not falling under the evaluation period.

C) Therefore, it is lawful for the Defendant to evaluate the value of the forest of this case, which appears difficult to calculate the market price as of the commencement date of the inheritance of this case, by the publicly assessed individual land price under Article 61(1) of the former Inheritance Tax and Gift Tax Act. This part of the Plaintiff’s assertion on a different premise is without merit.

3. Conclusion

The plaintiff's claim is dismissed as it is without merit.