Whether the donee can deduct the amount returned to the donor from the taxable value of donated property

A gift tax shall not be deducted from the taxable value of the gift tax even if the donee later returns part of the donated value to the donor when the donee acquired the property by gift meets the taxation requirements.

Article 2 of the Inheritance Tax and Gift Tax Act

Article 31 of the Inheritance Tax and Gift Tax Act: Scope of donated property

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing gift tax of KRW 218.716.000 against the Plaintiff on September 11, 2006 (which appears to be a clerical error in September 1, 2006) shall be revoked.

1. Details of the disposition;

A. The Plaintiff was donated KRW 716,00,000,000, in relation to the establishment of a ○○○○○○○○, Seoul, ○○○○-dong, ○○○○-○○○, as follows.

Deposit Date

Details

Amount

Establishment of franchises and

Details of lease;

May 21, 2004

쇠지지지지

100,000,000

May 24, 2004

Balance of Premium Payments

185,000,000

May 24, 2004

Fees for real estate brokerage;

15,000,000

May 24, 2004

Rental deposit

100,000,000

May 27, 2004

쇠지지 head office deposit

5,000,000

May 27, 2004

지지지지지지

3,000,000

Determination of Donation

May 27, 2004

Sub-committees

438,000,000

Human rights and expenses for interior works

June 2, 2004

Human rights and expenses for interior works

10,000,000

June 10, 2004

40,000,000

June 17, 2004

20,000,000

June 22, 2004

20,000,000

June 28, 2004

50,000,000

June 28, 2004

2,000,000

Determination of Donation

June 28, 2004

Sub-committees

142,000,000

Deposit in Plaintiff Account

July 1, 2004

Facility expenses for stores

30,000,000

July 5, 2004

50,000,000

July 14, 2004

20,000,000

July 15, 2004

30,000,000

July 26, 2004

7. Rent for store:

6,000,000

Determination of Donation

July 26, 2004

Sub-committees

136,000,000

Value of donated

716,00,000

B. Around February 2006, 006, ○○○○○○○○○○○○○○○ filed a complaint with the Plaintiff by violating the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) and embezzlement, etc. However, the prosecutor of the above prosecutor’s office rendered a non-guilty disposition against the Plaintiff on May 17, 2006.

C. On September 1, 2006, the Defendant notified the Seoul Central District Prosecutor’s Office of taxation data, and imposed a gift tax of KRW 218,716,00 on the Plaintiff (hereinafter “instant disposition”).

Classification

Reporting

Decisions (won)

Taxable Value of Gift Tax

0

716,00,000

Tax Rate

.

30%

calculated tax amount

0

154,800,000

Additional Tax for Insincere Report

0

30,960,000

Additional Tax for Insincere Payment

0

32,956,680

Total determined tax amount

0

218,716,680

D. On December 1, 2006, the Plaintiff appealed and filed an appeal with the National Tax Tribunal ○○○○○○○○ on December 1, 2006, but the National Tax Tribunal dismissed the Plaintiff’s appeal on March 21, 2007.

(Ground for recognition), each entry in Gap1-1, 2, 3-1, 2, 7, and 9

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Since the amount equivalent to the money that the Plaintiff received from ○○○○ was spent at the expense related to the opening of the business, it is unreasonable to view all of KRW 716,00,000 as the donation amount, as the donation amount.

(2) When the Plaintiff received the money from ○○○ on the condition that the Plaintiff would not marry, and the Plaintiff and ○○○○ did not marry and the said condition of rescission was fulfilled, the Plaintiff decided to return KRW 200 million to ○○○○. As such, the Plaintiff’s donated amount should be recognized as KRW 516,00,000, after deducting KRW 200,000.

(b) Fact of recognition;

○○○은 2005. 7. 9. △△△과 혼인한 후, 원고에게 증여한 위 금원이 대여한 것이라고 주장하면서 2005. 12. 16. 서울○○지방법원 ○○○○호로 채권가압류결정을 받아 위 상가보증금에 대하여 가압류를 집행하였다. ○○○은 2006. 4. 7. 원고를 상대로 서울○○지방법원 ○○○○○호로 부당이득금반환의 소를 제기하였고, 2006. 12. 11. 약혼해제에 따른 손해배상청구를 예비적으로 병합하자, 위 법원은 2007. 1. 22. 위 사건을 서울○○법원으로 이송하였다. 위 사건은 서울○○법원 ▲▲▲▲호(▽▽▽▽호)로 계속되다가, 2007. 8. 24. 원고와 ○○○ 사이에 "원고는 ○○○에게 손해배상금으로 총 2억 원을 지급한다"는 내용으로 조정이 성립하였다.

(Grounds for recognition) Each entry in Gap3-1-9, 4-1-92, the purport of the whole pleadings

C. Relevant provisions

￭ 상속세 및 증여세법 (2007. 12. 31. 법률 제8828호로 개정되기 전의 것)

Article 2 (Gift Tax Taxables)

(1) Where donated property falls under any of the following as of the date of donation due to a donation by a third party (excluding donation becoming effective due to the death of a donor; hereinafter the same shall apply), gift tax shall be levied on such donated property, as prescribed by this Act:

1. Where a person to whom property has been donated (hereinafter referred to as " donee") is a resident (including a non-profit corporation, the head office or main office of which is located in Korea; hereafter the same shall apply in this paragraph and Articles 54 and 59), all of the donated property, as a donation, by the

(3) The term "donation" used in this Act means a free transfer (including transfer at a remarkably low price) of any tangible or intangible property, the economic value of which can be calculated, directly or indirectly, to another person, notwithstanding the name, form, purpose, etc. of the relevant act or transaction, by which the property value of another person is increased by the contribution.

Article 31 (Scope of Donated Property)

(1) Gift property under Article 2 shall include property belonging to the donee, all articles having economic value capable of realizing in money and all de facto or de facto rights having property value.

(4) Where the donated property (excluding money) is returned by the reporting deadline under the provisions of Article 68 under an agreement between the parties concerned after donation, it shall be deemed that the donation had not been made from the beginning: Provided, That the same shall not apply to the case where the tax base and amount of tax were determined under the provisions of Article 76

(5) Where a donee returns the donated property (excluding money) to the donor or re-donates it to the donor within 3 months after the time limit for report pursuant to the provisions of Article 68 expires, gift tax shall not be levied on such returned or re-donations.

Article 47 (Taxable Amount of Gift Tax)

(1) The taxable amount of gift taxes shall be the total amount of the donated property under the provisions of this Act as of the date of donation (excluding the value of the donated property under the provisions of Articles 40 (1) 2, 41-3, 41-5, and 42 (4) (hereinafter referred to as the "Cumulative donated property") minus the amount of debts secured by the donated property (including debts, etc. prescribed by the Presidential Decree, such as debts, etc. related to the relevant donated property), which is obtained by the donee.

(2) Where the aggregate of the value of donated property received from the same person (where the donor is a lineal ascendant, including the spouse of such lineal ascendant) within 10 million won from the relevant donation date, such value shall be added to the taxable amount of gift taxes: Provided, That this shall not apply to any donated property excluded from adding.

￭ 상속세 및 증여세법 기본통칙

31-0, · 4 (Exclusion from Gift Tax Imposition on Nullity of Grounds for Acquisition)

In the application of the provisions of Article 31 (4) of the Act, if the right to the property on which the gift tax is imposed is cancelled by a judgment invalidating the cause of acquisition, the gift tax shall not be levied, and the gift tax levied shall be revoked: Provided, That this shall not apply to the case where it

D. Determination

(1) A gift tax liability is established upon the fulfillment of the taxation requirements at the time of the donee’s acquisition of property by gift. In the case of cash, the requirements for taxation of the gift tax are satisfied when the donee receives cash. Therefore, as long as the Plaintiff becomes liable for taxation of the gift tax immediately after the Plaintiff received cash from ○○○○, the claim that the amount donated by the Plaintiff was less than KRW 716,00,000,000 on the ground that the taxable value of the gift tax is less than the taxable value of the gift tax is groundless.

(2) According to the above facts of recognition, in the above litigation procedure, the mediation was established to pay KRW 200 million to ○○○ as compensation for damages for the cancellation of matrimonial engagement, and the plaintiff did not pay KRW 200 million to ○○○ by restitution following the fulfillment of the conditions of rescission of donation. Thus, the above argument that the amount received by the plaintiff should be recognized as KRW 516,00,000 after deducting KRW 200,000.

3. Conclusion

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