Board of Audit and Inspection 2010 depth0092

Since it is not possible to have engaged in forestry, the transfer of forest trees constitutes capital gains tax.

If the transfer of forest trees does not constitute a project, such as forestry, the transfer income tax shall be imposed by considering the entire transfer of forest land as the transfer income tax, and there is no justifiable reason for additional tax reduction or exemption.

Article 19 of the Income Tax Act, Article 94 of the Income Tax Act, and Article 4 of the Income Tax Act

Article 51 (8) of the Enforcement Decree of the Income Tax Act

2010Gudan27175 Revocation of Disposition of Imposing capital gains tax

Doz.

○ Head of tax office

May 27, 2011

June 24, 2011

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 capital gains tax of KRW 199,276,970 against the Plaintiff on February 4, 2010 is revoked.

1. Details of the disposition;

A. On December 28, 1989, the Plaintiff transferred 1,673,255,30 won for the acquisition of public land on December 16, 2008, to the Republic of Korea as 1,673,25,30 won for the acquisition of 70 m37,686 m2,06 m2,000 m2,066 m2,000,000 (hereinafter collectively referred to as “the instant forest”). This is because the instant forest was incorporated into the land for national defense and military projects (a project for expanding the KAF training site), which was conducted through consultation pursuant to the Act on Acquisition of and Compensation for Land, etc. for Public Works, 30 m2,07 m2,000 m2,07 m2,07 m2,07 m2,000 m2,07 m2,000 m2,07 m2,07 m25,07 m2,07.

(C) Accordingly, on February 4, 2010, the Defendant issued a disposition to correct and notify the transfer income tax of KRW 19,276,970 (including additional tax on negligent tax returns, KRW 17,687,479, KRW 12,278,76 for additional tax on negligent tax return, and KRW 12,78,76 for additional tax on negligent tax payment), on the ground that the Plaintiff cannot be deemed as a business operator engaging in forestry, and that the transfer of trees cannot be deemed as objectively assessed because the value of trees cannot be deemed as having been evaluated because the price of trees was not indicated separately in the compensation contract for losses, and thus the transfer of forest trees cannot be deemed as business income. Accordingly, the Defendant imposed a disposition to notify the Plaintiff of the correction of the transfer income tax of KRW 19,276,970 (including the total income from the transfer of forest land of this case as income

2. Whether the disposition is lawful;

A. The plaintiff's assertion

① The Plaintiff acquired approximately KRW 60,00,00 for the purpose of growing the instant forest that was afforested by approximately KRW 10,00 for 10,00 for scams, and thereafter, had engaged in growing activities until the Plaintiff transferred the instant forest by designating an employee of a corporation whose representative director as a person in charge of growing and transferring the instant forest. Even when the Republic of Korea acquired the instant forest, 907,778,830 won for forest land, and 907,778,830 won for forest trees, which is the amount obtained by subtracting the publicly announced market price of forest from the compensation value of forest land in this case, shall not be deemed as income from the transfer of forest trees, not as income from the transfer of forest trees. It is unlawful to deem otherwise and make the instant disposition.

② Even if the Plaintiff’s return of the entire income from the transfer of forest land of this case as capital gains was erroneous, the Plaintiff merely understood the income from the transfer of forest land of this case as business income by referring to the rules of the National Tax Service and the relevant Supreme Court precedents, etc., and did not under-reported capital gains tax for the purpose of reducing the tax burden. In such a case, it should be deemed that there is a circumstance that it is unreasonable to expect the Plaintiff to fulfill such tax liability. In addition, the portion of KRW 17,687,479 in the disposition of this case is unlawful.

B. Relevant 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 subject to global income tax, and income generated from such business shall be subject to transfer income tax unless the transfer of land becomes real estate 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 amount if the income from the transfer of the forest land is calculated along with the forest land. This is based on the premise that the felling or transfer of the forest trees falls under the business, such as forestry, if the forest land and its fixed trees are transferred together with the forest land, and the income from the transfer of the forest land falls under the general provisions of Article 51(8) of the Enforcement Decree of the Income Tax Act. Thus, in order to separate the transfer of the forest land and the business income from the transfer of the forest land, the provision of the relevant forest land shall not be deemed as the transfer of the forest land, regardless of the basic provisions of the forest land.

Considering the respective circumstances as to the instant case, where there is no dispute between the parties, or where Gap evidence Nos. 11 through 15, Eul evidence Nos. 2-2 through 5, and Eul evidence Nos. 3-1 through 6, each of the statements No. 3-4, the whole purport of the pleadings is added, the evidence submitted by the plaintiff alone is difficult to deem that the plaintiff continuously and repeatedly conducted a steering or growing of the instant forest as part of an independent business for profit-making purposes, or engaged in a forestry business. It is difficult to deem that the forest trees of the instant forest are transferred to the Republic of Korea as part of the forestry. Accordingly, it is reasonable to deem that the transfer of forest trees of the instant forest is merely a transfer of the constituent part incidental to the transfer of forest land, not a conversion of the forestry business, etc., and merely a transfer of the constituent part incidental to the transfer of forest land, and thus, is subject to the transfer income tax. The Plaintiff’s

1) The Plaintiff is a manager of the EEEE corporation, and the said company seems not to be a company for forestry purposes.

2) The Plaintiff reported the comprehensive income tax due to the deforestation and transfer of forest trees pursuant to Article 168(1) of the Income Tax Act until he acquires and transfers the forest of this case; the fact that he cuts and sells forest trees; and there is no fact that the Plaintiff obtained authorization and permission from the competent authority for felling forest trees within the forest of this case.

3) There is no provision regarding the amount of compensation for forest trees or the amount of compensation for forest trees in the indemnity agreement and the indemnity agreement (A evidence 12-1, 2) on the instant forest land (the document of the contract, the indication of land, etc., and the purchase price of land, etc., under Article 1(1)); however, it appears in the expression that the term “a, etc.” is unclear in its expression, and the appraisal document prepared for the acquisition through consultation is not evaluated separately from the forest land, and the Plaintiff did not submit the appraisal document despite the recommendation of the court. Accordingly, there is no objective ground to support the Plaintiff’s assertion that the Republic of Korea calculated the amount of the forest land as the officially announced land value as the forest land and the amount of the forest trees as the amount of compensation as the amount of compensation and decided as the amount of compensation.

4) The Plaintiff asserted to the effect that the value of the instant forest acquired through consultation is 219% of the officially announced land price, and the price of the land acquired through consultation is included in the value of the forest. However, the Plaintiff transferred not only the instant forest but also the rice paddy field owned by it (55-1m2, 924m2, 54m2, 54m2, 54m2, 54m2, 54m2, 54m2, and 924m2, such as the instant forest and the rice paddy field).

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, namely, a group of standing trees, out of the ground land, is treated as an independent real estate. A group of trees which does not register the above, can be the object of transaction as an independent real estate if it has the method of public announcement that the above method of public announcement is a clear person. Since the Plaintiff did not have the above method of deception or name as to forest trees in the forest land of this case, the forest trees are parts of the forest land of this case and are only parts thereof.

6) The Plaintiff asserted that, after acquiring approximately 60,00 jus and approximately 10,000 scam trees were afforested, the Plaintiff engaged in growing business since he was designated as a person in charge of growing and managing two employees of the legal entity whose representative director is the forest of this case as to the forest of this case. However, even according to the Plaintiff’s assertion, the person in charge of growing is not an individual employee of the Plaintiff, and the cost of the year during which the work was not carried out every year and the cost of the year during which the work was not carried out is within 50,000 won as a substitute, even if the Plaintiff’s assertion is true, it is difficult to view that the Plaintiff, solely on the basis of such fact, continuously afforested or cultivated the forest of this case as part of an independent business with a profit-making independent position, or engaged in forestry.

(2) As to the Plaintiff’s assertion

Under the tax law, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, a taxpayer’s intentional or negligent act is not considered, and the site, error, etc. of statutes do not constitute justifiable grounds that do not constitute a breach of duty (see Supreme Court Decision 2002Du10780, Jun. 24, 2004).

The National Tax Service's established rules and Supreme Court's precedents required by the Plaintiff are as follows: (a) if the cost of transfer of forest trees does not correspond to business income when the transfer of forest land and forest trees is transferred in a lump sum as the Plaintiff is a person in the complaint, it shall be imposed as capital gains; and (b) if the cost of transfer does not correspond to business income, it shall be imposed as business income; and (c) it is not contrary to the judgment of the court of this case (the judgment of the court of this case shall be subject to capital gains tax since the part of income from the transfer of forest trees among the income from the transfer of forest land in this case does not constitute business income, even if the part of income from the transfer of forest land in this case is not subject to business income; and (d) it does not constitute a case where there

(3) Sub-determination

The Defendant’s disposition of this case is legitimate.

3. Conclusion

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