Cho High Court Decision 2010Du3665 ( October 26, 2011)

Donations

Dismissal

There is no dispute over the fact that an OO has deposited 1.5 billion won in the account of the OO and acquired the stocks at issue, and even after creation, it is consistently stated that the OO acquired the funds of the OO and sold or managed the funds of the OO was led by the OO, and since the transfer proceeds also appeared to have been used for repayment of loans of the OO and personal use, it is reasonable to view that the OO has held title trust with the OO.

Inheritance Tax and Gift Tax Act Article 45-2

The appeal is dismissed.

1. Summary of disposition;

A. On November 24, 2005, the claimant transferred 463,830 won per share to an unlisted corporation under the name of theO, 15,000 shares (hereinafter referred to as "OO") after acquiring 100,00 won per share of 100,000 shares (hereinafter referred to as "OO shares") by participating in the issue of new shares issued on December 27, 2004, OOO204, OO204, O27,715 shares (hereinafter referred to as "OO") and acquiring 15,00 shares (hereinafter referred to as "5,285 shares"), 206.2.3 billion won per share, 206, 206, 300,000 won per share (hereinafter referred to as "OO shares"), 206, 206, 306, 206, 206, 206, 206, 3715 shares shares (hereinafter referred to as additional shares):

B. The Director of the Regional Tax Office of OO shall conduct an integrated investigation of corporate tax and stock change for the business year of 205 or 2008 against OO and claimant, etc. on August 25, 2009 and December 1, 2009 (OOO on April 8, 2008, bypassing listing) as the claimant who is the vice president of the OO-listed corporation. The head of the Regional Tax Office of OO-listed corporation shall consider the actual owner of the O-listed shares acquired on November 24, 2005 as the claimant of the O-listed corporation. On February 27, 2006, the market price of the O-listed shares transferred 50,585 won per share, O-O-listed shares as 15,950 won per share, O-listed shares as 300,581, 576, 146, 770, 156, etc. of the Inheritance Tax and Gift Tax Act.

Tax OOO on the claimant, etc.

C. The claimant appealed and filed an appeal on October 1, 2010.

2. Opinions of the claimant and disposition agency;

A. The claimant's assertion

(1) The key shares were acquired by the claimant, the representative director of the OOO, and the claimant did not have title trust the shares to the OO.

(A) On the basis of an OO’s written response, the agency held that the claimant acquired the outstanding shares of 1.5 billion won from OO to transfer them to OO based on the OO’s written response, and that the claimant held that the claimant held that the OO held the outstanding shares under title trust. However, the claimant acquired the outstanding shares under the OO’s joint investment with 3 persons under the OO’s joint investment under the OO’s name after borrowing the surplus funds in an international currency with OO during the overseas business trip, and the claimant was to jointly invest in the name of O that was not a member of OO, and jointly distribute the profits therefrom. However, it is merely that the claimant transferred the O’s funds under the OO’s name under the direction of OO to OO under the name of the claimant.

(B) An OO is a KOSDAQ-listed corporation, and 1.5 billion won has been leased to the claimant and the non-listed director, respectively. It is erroneous in the misunderstanding of the fact that the OO was given an order to lend 3 billion won to the claimant and the non-listed director on the outside of the claimant's authority, even though the OO was given, the OO was transferred to the claimant's account in accordance with the statement of the OO in a long relationship with the OO and the 1.5 billion won has been transferred from the OO to the OO and the 1.5 billion won has been transferred from the OO to the claimant's account.

(C) On the basis of the written answer of the OO, the agency claims that the funds that the claimant prepared and withdrawn the loan contract with the OO are deposited into the new bank account of the OOO, and that the OO is a title trust because there is no evidence to prove the loan regarding the acquisition of the stocks at issue with the funds. However, since the claimant and the OO and the 3OO were joint investments with the OO lending the funds of the OO, they did not require a separate loan certificate, etc., it is unreasonable that the claimant made the joint investments with the OO.

(D) In addition, three joint investors jointly invest in the outstanding shares, and 5,285 shares out of the outstanding shares on February 2, 2006, but as the temporary use by OOO was made by OOO, 440,000 shares out of 14, April 14, 2006 were provided as security to OOO, and 3,50,000,000 won was provided as security by OOO. The loans related to the acquisition of the outstanding shares were repaid in full and the remaining shares were distributed jointly by OO to OO, and OO also recognized that OO was jointly invested by 3,00,000 won, and that the claimant, OO, and OO had a title trust with OO.

(2) The acquisition of the stocks at issue is that three persons, such as OO, jointly invest and acquire the stocks in the name of OO, and taxes on the stocks at issue do not take place any tax liability other than capital gains tax and securities transaction tax. In such investment, capital gains tax is more than investing more than investing three persons. The shares invested by OO is 17.34% of the total shares of OO as of the end of December 2005, and there was no intention to avoid oligopolistic shareholders or to evade other kinds of taxes.

In addition, in order to pay the transfer income tax and securities transaction tax, the OO reported on or around May 2006 to the OO tax office, but it is delayed payment because the OO would pay the tax after temporary rent to the OOO because it did not perform it as the wind that it borrowed the tax, so it is improper for the OO and the OO to recognize that both the OO and the OO made a joint investment in the acquisition of the stock at issue, but it is improper for the OO to specify the claimant and make a title trust to the OO.

(3) The comprehensive exchange of shares is to apply mutatis mutandis to the merger procedure, and the gift tax is not imposed on the allocation of new shares by the comprehensive exchange of shares pursuant to the Securities and Exchange Act, considering the same as the merger.

(A) Article 38(1) of the Inheritance Tax and Gift Tax Act and Article 28(1) of the Enforcement Decree of the same Act provide that a merger conducted by an Association-registered corporation under the Securities and Exchange Act with another corporation pursuant to the same Act shall not be deemed as a merger between corporations with a special relationship, and thus, gift tax shall not be imposed. In light of this, the court decides that the imposition of gift tax is consistent with the substance of the transaction (Seoul Administrative Court 2009Guhap56129, Sept. 13, 2010), considering that the allocation of new shares pursuant to the Securities and Exchange Act is the same as that of the merger (Seoul Administrative Court 2009Guhap56129, Sept

(B) In addition, Article 52 of the Corporate Tax Act is applicable to the application of the rejection of unfair calculation because an all-inclusive share swap was conducted betweenOOs. The adequacy of the share exchange ratio betweenOOs is subject to the application of Article 52 of the Corporate Tax Act. Article 88(2) of the Enforcement Decree of the same Act provides that "transaction between the relevant corporation and the related party at the time of such act" shall apply to "transaction between the relevant corporation and the related party", and also applies to transaction between the related party. Thus, the price at which an all-inclusive share exchange was made betweenOOs shall not be subject to the avoidance of unfair calculation under Article 52 of the Corporate Tax Act, and Article 26(9) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "Where an asset is acquired or transferred between an individual and a corporation and the price is not subject to Article 89 of the Enforcement Decree of the Corporate Tax Act, the provisions of paragraphs (1) through (8) shall not be subject to gift tax under Article 35(2)

(C) In light of the fact that the claimant, etc. did not have a position to force an appraisal of the stocks of an OO on the high-priced level when determining the exchange ratio of the stocks of an OO, and only participated from investors. On February 2, 2006, the shareholder of 20,570 shares trading 20,570 won per OO shares to an OO, the applicant, etc. falls under ordinary transactions, and the comprehensive share swap of the stocks at issue constitutes a justifiable cause under the ordinary transaction practices, and thus, the gift tax under Article 35(2) of the Inheritance Tax and Gift Tax Act cannot be imposed.

(D) In order to conduct an all-inclusive share swap, an appraisal request was made to an outside appraisal organization pursuant to the Securities and Exchange Act, and as a result, an appraisal was made at KRW 188,657 per share of the stocks issued by theOO, and KRW 5,174 per share of the stocks issued by the OO, and accordingly, a share swap was made in accordance with legitimate procedures. However, the disposal agency did not subsequently proceed as originally anticipated, and instead did not recognize the assessment value at the time of the all-inclusive share swap and did not make an appraisal of the O shares as the assessment method under the Inheritance Tax and Gift

(E) In addition, the agency asserts that an appraisal of the amount of KRW 188,657 per share of the stocks issued by theOO was more advanced than the actual assessment. However, on February 2, 2006, five other than the OOO transferred the stocks of the OO to the OO in the amount of KRW 474,547 won per share or KRW 401,069 won per share and traded the amount of KRW 463,830 per share in the average amount of KRW 463,830 per share, it is improper to recognize it as the market price and evaluate it as a supplementary assessment method under the Inheritance Tax and Gift Tax Act. In the case of the unlisted stocks with little market value, if there is a normal example of the transaction that properly reflects the objective exchange value, the agency should interpret the transaction value in terms of the market price and evaluate the value of the stocks, and interpret the tax law arbitrarily to transfer the stocks to the high-value of gift tax without justifiable grounds by applying the provisions of Article 35(2) of Inheritance Tax and Gift Tax Act.

(f) In order to apply Article 35(2) of the Inheritance Tax and Gift Tax Act, the disposition agency assessed the OO’s stocks by applying the evaluation rules under the Inheritance Tax and Gift Tax Act, which is the date of the share swap, without understanding the characteristics of the transaction, in order to apply Article 35(2) of the Inheritance Tax and Gift Tax Act. However, in the event that the date of share swap is the date of share swap, there is a problem that the exchange should be made first and the rate of share swap should be set later, and it is unreasonable that the disposition agency deemed all the gift gains to regard the increase of the market price formed in the Exchange after the date of the share swap as the date of the all-inclusive share swap as the date of share swap as the date of appraisal. As such,

(b) Opinions of disposition agencies;

(1) The claimant argues that the claimant, in consultation with the OO, deposited 1.5 billion won in borrowed money from the OO and acquired the outstanding shares in the OO account, not the OO's title trust, and that the claimant, the OOO, and 3 OOO were jointly invested. However, in the response of the OO related to the acquisition of the outstanding shares, the OO stated that the head of the O and the seal were placed on the OO, and that the claimant specifically stated that the OO paid the outstanding shares with the funds of the claimant, not with knowledge of the details of the acquisition of the shares, and that the OO paid the outstanding shares with the funds of the claimant, not with the OO, it is reasonable to view that the O

(A) Although the claimant asserts that the acquisition of the shares in question is three co-investments, it is general that three parties pay the share price and distribute new shares in their own name if they make a joint investment. The claimant is not clear as to the reasons why the share price was allocated in the name of OO.

(B) Examining the written response to the OO’s text, the OO only lent the name of the claimant without receiving the price for a separate title trust due to the relationship with the OO, and the sale or management of the allocated shares was also led by the claimant, and the claimant’s assertion is merely an argument to avoid high-amount taxation.

(C) Even if the co-investment is true, it is not proven that the co-investment is not a title trust, and in fact, it is reasonable to interpret that the claimant and the OOO as to the profit from the sale of the outstanding shares, and that the OO as to the profit from the sale of the outstanding shares, and that the OO as to the payment of the share price for the profit from the sale of the shares in question, and that the OO as to the ordinary co-investment, it is reasonable to allocate profits arising from the joint investment according to the investor's shares or contribution ratio in general or in the case of OOO only lent the name without making an investment or contribution in relation to the acquisition of the shares in question. Therefore, the argument that the OO and OO

(D) In addition, the written answer of the OO stated that "IO was the representative director of the OO, and the claimant was the vice president of the KO, and was present at the capital increase with the recommendation of OO, which is a part of the film production industry that he had been aware of before and after the KO. O's short-term loans 1.5 billion won to the claimant is well known of the entertainment industry, and the claimant made a proposal to hold title trust with OO, and it is confirmed that the claimant has made a proposal to sell the O's issued stocks in the name of the OO sold to the OO. It is reasonable to OO's statement that "I will not have received investment profits, and that I would have never interfered with the initial settlement or profit distribution." It is reasonable to OO's statement that I would have sold the O's issued stocks to all the claimant, but that I would have to make a statement that I would have sold the O's issued stocks to the Claimant and that I would have provided the O's issued stocks to the O's company as collateral.

(E) In addition, the claimant asserts that the OO filed a voluntary report on the capital gains tax and securities transaction tax at the end of May 2006, and that the OO was unable to pay the tax that was prepared to pay the transfer tax, etc. after the temporary rent, but the OO only stated that the head of the Tong was an abnormal route, but it is not known that the OO received the funds prepared to pay the transfer tax, etc. because it is unaware of the place of use of the money, and it is difficult to view that the OO that only lent the name was voluntarily reported, the claimant's assertion is groundless.

(2) The key shares are those jointly invested by three persons, such as one person, one person, and one person, and three persons, and the investment is made in the name of the OOO. However, according to the OO's answer, there was a provision that a shareholder who owns more than 5% of the shares of a listed corporation under tax law should pay capital gains tax if he sells the shares within the head of the corporation, and the title trustee provided a title trust for the purpose of evading capital gains tax. The title trustee, was in arrears with capital gains tax and securities transaction tax due to the transfer of the shares in the first OO, and the title trustee, due to the lack of the fact that he/she paid relevant taxes by filing a tax return or filing a tax return without filing a tax return for the tax to be paid through a title trust, and thus, the claimant’s assertion that there was no purpose of tax avoidance cannot be accepted.

(3) In applying Article 35(2) of the Inheritance Tax and Gift Tax Act, the claimant asserts that the disposition on which gift tax was imposed on the claimant by deeming that the claimant is a high-priced transfer of outstanding shares and imposing the gift tax by applying Article 28(1) of the Enforcement Decree of the same Act (Seoul Administrative Court 2009Guhap56129, September 13, 2010). However, in applying Article 28(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, where Article 38 of the same Act applies, the merger between the listed corporation and the non-listed corporation shall not be deemed a merger between the corporations having a special relationship. However, the Supreme Court held that the disposition imposed by applying Article 39(1)1(c) of the Inheritance Tax and Gift Tax Act with respect to the comprehensive exchange of shares between the listed corporation and the non-listed corporation is consistent with the substance of the transaction, and this case is not applicable to the taxation of shares by the claimant without any justifiable reason.

(A) In addition, the claimant asserts that the provisions of Article 52 of the Corporate Tax and Gift Tax Act, other than the Inheritance Tax and Gift Tax Act, shall apply to the all-inclusive share swap betweenOs. However, in cases where the claimant acquires or transfers the property between persons who are not specially related parties pursuant to the provisions of Article 35(2) of the Inheritance Tax and Gift Tax Act, and where the claimant acquires or transfers the property at a price significantly lower than the market price or at a price considerably higher than the market price in light of the transactional practice, it is reasonable to apply the provisions of Article 35 of the Inheritance Tax and Gift Tax Act, other than Article 52 of the Corporate Tax Act, since the claimant assessed the issue shares at a higher price without justifiable grounds and transferred them to OOs (exchange) and allocated new shares to OO.

(B) In addition, the claimant asserts that the transfer value of outstanding shares of the claimant pursuant to Article 26 (9) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act is not subject to Article 35 of the Inheritance Tax and Gift Tax Act because it falls under the market price under the Corporate Tax Act. However, in the application of Article 35 of the Inheritance Tax and Gift Tax Act, Article 26 (9) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act is not subject to paragraphs (1) through (8) of the Corporate Tax Act if the transfer or transfer of the property between the individual and the corporation falls under the price under Article 89 of the Enforcement Decree of the Corporate Tax Act and the price is not subject to Article 52 of the Corporate Tax Act for the transaction of the corporation concerned, and the claimant refers to Article 26 (9) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act without proving that the transfer value of

3. Hearing and determination

A. Key issue

① Whether key shares are nominal trust or not

② Whether the title trust of the outstanding shares was the purpose of tax avoidance

(3) The propriety of the disposition imposing the tax on the comprehensive stock exchange of outstanding stocks by deeming them as an elevated transfer pursuant to Article 35 (2) of the Inheritance Tax and Gift Tax Act.

(b) Related statutes;

(1) Issues (1) and (2)

(A) Article 35 of the Inheritance Tax and Gift Tax Act (the donation, etc. of profits from the transfer at a low price or high price transfer) ① When the relevant property is transferred or transferred to a person who falls under any of the following subparagraphs, the amount equivalent to the difference between the price and the market price shall be deemed as the value of donated property.

1. Where a person takes over property from a third person at a price lower than the market price, the transferee of such property;

2. In case where the property is transferred to another person at a price above the market price, the transferor of such property;

(2) In the application of the provisions of paragraph (1), where property is acquired or transferred between persons other than the specially related persons, an amount equivalent to the profits prescribed by the Presidential Decree shall be presumed to have been donated the difference between the price and the market price only when the property is acquired or transferred at a price significantly lower than the market price without any justifiable reason in light of transaction practices, and the amount equivalent to such profits shall

(3) Persons in a special relationship as referred to in paragraph (2), the scope of significantly low or high value shall be prescribed by Presidential Decree.

Article 45-2 (Presumption of Donation of Property under Title Trust) (1) In case where the actual owner and the nominal owner are different from the property (excluding land and buildings; hereafter in this Article the same shall apply), the value of the property shall be deemed to have been donated by the actual owner on the date when the actual owner are registered, etc. as the nominal owner (where the property requires a change of ownership, it refers to the day following the last day of the year following the year in which the date of acquisition of ownership falls), notwithstanding Article 14 of the Framework Act on National Taxes: Provided, That the same shall not apply

1. Where any property is registered in another person's name without the purpose of tax avoidance, or transfer is not made in the name of the actual owner who acquired the ownership;

(2) Relevant issue No. 3

(a) The donation of profits from a merger under Article 38 of the Inheritance Tax and Gift Tax Act (1) (the donation of profits from a merger of corporations with a special relationship prescribed by Presidential Decree (including a merger by division; hereinafter the same shall apply in this Article) or a stockholder (including an investor; hereinafter the same shall apply in this Article) of a corporation that is extinguished or absorption due to a merger of corporations with a special relationship prescribed by Presidential Decree (including a merger by division; hereinafter the same shall apply in this Article) who is a major shareholder prescribed by Presidential Decree receives profits prescribed by Presidential Decree, the amount equivalent to such profits

Article 39. (Donation of Benefits from Hyuper) ① Where a corporation issues new stocks or equity shares (hereafter in this Article, referred to as “new stocks”) for the purpose of increasing its capital (including the amount of investment; hereafter in this Article and Article 39-2, the same shall apply), the amount equivalent to the relevant benefits shall be deemed the value of donated property of the person who has acquired such benefits:

(c) Profits acquired by a person who is not a stockholder of the relevant corporation by directly obtaining an allocation of new stocks from the relevant corporation (including the case of directly accepting and acquiring the relevant new stocks from an underwriter under the Securities and Exchange Act; hereafter in this paragraph, the same shall apply), or by stockholders of the relevant corporation by directly obtaining an allocation of new stocks in excess of the number entitled to be allocated under equal conditions

(1) The value of property on which inheritance tax or gift tax is imposed under this Act shall be based on the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as the “date of appraisal”). In such cases, the value assessed by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63 (2)) shall be deemed the market price.

(2) The market price referred to in paragraph (1) shall be the price which is deemed to be normal in cases of free trade between many and unspecified persons, and shall include the price of confinement and public auction, appraisal price, and others which are deemed to be the market price

(3) In applying paragraph (1), where it is difficult to compute the market price, the value assessed by the methods prescribed in Articles 61 through 65 in consideration of the type, scale, transaction status, etc. of the relevant property.

Article 63 (Evaluation of Excellent Securities, etc.) (1) Evaluation of securities, etc. shall be conducted by the following methods:

1. Appraisal of stocks and investment shares:

(a) The average amount of stocks and equity shares traded on the Korea Stock Exchange shall be the average daily market price ( regardless of whether there is any transaction record) of the Korea Stock Exchange every two months before or after the evaluation base date: Provided, That in the calculation of the average amount, in cases where it is inappropriate to be based on the average amount of the period calculated, as prescribed by Presidential Decree, during two months before or after the evaluation base date, or during or after two months respectively, respectively, the average amount of the period calculated as prescribed by Presidential Decree;

(b) The provisions of item (a) shall apply mutatis mutandis to the stocks and equity shares as prescribed by the Presidential Decree from among the stocks and equity shares of the Association-registered corporations as prescribed by the Presidential Decree. In this case, the “final market price”

(c) Stocks and equity shares not listed on the Korea Stock Exchange other than those under item (b) shall be appraised according to the methods prescribed by Presidential Decree in consideration of corporation assets and profits;

(B) The method, etc. of calculating the profits from the transfer of china or high price by Article 26(2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. (1) The term “ remarkably high price” in Article 35(2) of the Act refers to the price in the case where the market price is 30/10 or more of the market price.

(7) The term “gains prescribed by the Presidential Decree” in Article 35 (2) of the Act means the amount calculated by subtracting 300 million won, respectively, from the difference between the price calculated under the provisions of paragraphs (5) and (6) and the

(8) The base date for calculation of the prices and market prices referred to in paragraphs (1), (2), (5) and (6) shall be the date of liquidation of the prices of the relevant property (referring to the date stipulated in subparagraphs 1 through 3 of Article 162 (1) of the Enforcement Decree of the Income Tax Act, in cases falling under Article 162 (1) 1 through 3 of the same Act; hereafter referred to as "base date for calculation" in this paragraph), and where it is deemed unreasonable to serve as the base date for calculation due to sudden changes, etc. in exchange rates after the sales

(9) In the application of Article 35 of the Act, where the property is transferred or transferred between an individual and a corporation and the price thereof falls under the value provided for in Article 89 of the Enforcement Decree of the Corporate Tax Act and Article 52 of the Corporate Tax Act is not applicable to the transaction of the relevant corporation (including the case where the transaction is made in an overtime market provided for in subparagraph 2 of paragraph (1)), the provisions of paragraphs (1) through (8) shall not apply: Provided, That this shall not apply where the inheritance tax or gift

(1) For the purpose of Article 38 (1) of the Act, the term “merger of corporations in a special relationship as prescribed by the Presidential Decree” means a merger between corporations falling under any of the following subparagraphs during the period from the first day of the business year immediately preceding the business year in which the merger is registered to the date of the merger (referring to the first day of the commencement where corporations are merged with other corporations) to the date of the registration of the merger: Provided, That a merger conducted by a stock-listed corporation or Association-registered corporation under the Securities and Exchange Act among mergers between corporations falling under any of the following subparagraphs pursuant to Article 190-2 of the same Act and Article 84-7

1. A corporation having a special relationship under Article 87 (1) of the Enforcement Decree of the Corporate Tax Act;

"Average amount of the period calculated as prescribed by Presidential Decree" in the proviso to Article 63 (1) 1 (a) of the Act means the average amount of the periods calculated according to the following classifications:

1. Where a cause of capital increase or merger occurs before the evaluation base date, the period from the date following the date when the same cause occurs (referring to the date nearest to the evaluation base date if a cause of capital increase or merger occurs two times or more; hereafter the same shall apply in this Article) to the date two months from the evaluation base date;

2. In cases of capital increase or merger after the evaluation base date, the period from two months before the evaluation base date to the day before the date when the same cause occurs;

3. In cases where a cause of capital increase or merger occurs after the evaluation base date or before or after the evaluation base date, the period from the day after the date when the same cause occurs to the day before the evaluation base date before the date when the

(C) The head of the district tax office having jurisdiction over the place of tax payment or the head of the regional tax office having jurisdiction over the place of tax payment, where it is deemed that the tax burden on the corporation's income has been unjustly reduced due to a transaction with a person with a special relationship prescribed by the Presidential Decree (hereinafter referred to as "specially related person"), may calculate the corporation's income for each business year regardless of the calculation of the corporation's income amount (hereinafter "Calculation of wrongful act").

(2) In the application of the provisions of paragraph (1), the standard for determination shall be the prices (including rates, interest rates, rents, exchange rates and other equivalent rates; hereafter referred to as "market prices" in this Article) applied or to be applied in sound trade between sound social norms and commercial practices and persons with no special relationship.

(D) Article 88(1) of the Enforcement Decree of the Corporate Tax Act: (1) “Where it is deemed that the tax burden has been unjustly reduced” in Article 52(1) of the Act means any of the following cases:

1. Where assets are purchased or received as investments in kind at a price above the market price or the assets are excessively depreciated;

(2) The provisions of paragraph (1) shall apply to transactions (including transactions conducted through persons other than specially related persons) between the relevant corporation and the specially related persons as of the time of such acts.

(1) In the application of the provisions of Article 52 (2) of the Act, if there is a price generally traded with many and unspecified persons other than a person with a special relationship or a third party who is not a person with a special relationship in the situation similar to the transaction concerned, the price shall be determined.

(2) In the application of Article 52 (2) of the Act, if the market price is unclear, the amount calculated by applying in sequence the following subparagraphs:

1. Where there is a value appraised by the appraisal evaluation corporation under the Public Notice of Values and Appraisal of Real Estate Act, the value thereof (in case there are not less than 2 appraised values, the average amount of the appraised values): Provided, That stocks, etc. shall be excluded;

2. The amount appraised by the mutatis mutandis application of the provisions of Articles 38 through 39-2, and 61 through 64 of the Inheritance Tax and Gift Tax Act. In applying mutatis mutandis the provisions of Articles 63 (2) 1 of the Inheritance Tax and Gift Tax Act and Article 57 (1) and (2) of the Enforcement Decree of the same Act, "immediately six months (three months in case of stocks, etc. upon which gift tax is levied)" shall be deemed to be "immediately six months", respectively.

(e) Article 190-2 of the Securities and Exchange Act (1) Where a stock-listed corporation or KOSDAQ-listed corporation intends to merge with another corporation, it shall report it to the Financial Services Commission and the Exchange. In this case, a stock-listed corporation or KOSDAQ-listed corporation shall report its merger-related matters in accordance with the merger

(2) The provisions of paragraph (1) shall apply mutatis mutandis where any stock-listed corporation or any KOSDAQ-listed corporation falls under any of the following subparagraphs:

2. In the case of intending to make an all-inclusive exchange or transfer of stocks;

(f) The requirements, procedures, etc. for the merger of the Special Metropolitan City Mayor of the Securities and Exchange Act. (1) Where a stock-listed corporation or a KOSDAQ-listed corporation intends to merge with another corporation, it shall be the merged value calculated by the following methods. In this case, where a stock-listed corporation or KOSDAQ-listed corporation is unable to calculate the price referred to in the main sentence of subparagraph 1 or 2 (a), it shall be the

2. In case of a merger between stock-listed corporations or KOSDAQ-listed corporations and corporations which are not stock-listed corporations or KOSDAQ-listed corporations, the price under the following items:

(a) In case of a stock-listed corporation or KOSDAQ-listed corporation, the price under subparagraph 1: Provided, That in case as prescribed by Ordinance of the Prime Minister, it may be

(b) In cases of a corporation which is not a stock-listed corporation or KOSDAQ-listed corporation, the price calculated according to the methods prescribed by Ordinance of the Prime Minister;

(g) Establishment of a complete parent company through an all-inclusive share swap under the provisions of this Sub-Section 360-2 of the Commercial Act. (1) Company may become a company (hereinafter referred to as a "full parent company") holding the total number of shares issued by another company by an all-inclusive share swap under the provisions of this Sub-Section. In this case, the other company shall be referred to

(2) The shares of a company becoming a complete subsidiary by an all-inclusive share swap (hereafter in this Sub-Section, referred to as "share swap") shall be transferred to a company becoming a complete parent company by means of a share swap on the date of such share swap, and the shareholders of the company becoming the said complete subsidiary shall become the shareholders of the company becoming the said complete parent company by receiving the allocation of new shares to be issued by the company becoming

Article 360-3 (Preparation of Share Swap Contract and Approval of General Meeting of Shareholders) (1) Any company intending to swap shall prepare a share swap contract and obtain approval therefor from the general meeting of shareholders

(2) A resolution for approval under paragraph (1) shall be made in accordance with Article 434.

(3) A share swap contract shall include the following matters:

(Dismissal omitted)

C. Facts and determination

(1) We examine issues ①.

(A) According to the taxation review data such as the gift tax decision resolution of the disposition agency and the planning and audit result of capital increase by the third party allocation method, the result of the financial investigation on November 24, 2005 on the amount of 1.5 billion won paid for capital increase by the OOO's capital increase, the claimant borrowed 1.5 billion won from the OO to transfer it to the OO's capital increase in the OO bank, and re-transfered the fund to the OO's capital increase in the OO bank.

(B) On February 2, 2006, in relation to the proceeds from the sale of the stock at issue, the OO transferred to the OO on February 2, 2006, 2,000 won of the proceeds from the sale of the stock (2,507 million won of the purchase of the stock at issue) was paid to the OO (the representative director of the OO) after the OO paid the proceeds from the sale of the stock at check after deducting common expenses. The proceeds from the sale of the stock deposited into the account of the OO bank after the withdrawal of the check did not coincide with the receiver of the check by mixing the check during the settlement of the payment at check. As a result of the financial investigation of the proceeds from the sale of the stock at issue, the proceeds from the sale was reverted to the related persons of the OO, and the proceeds from the sale of the stock at issue was 708,466, 97, 256, 2000 won of the O's funds at will and stated to the 202000,0000.

(C) As to whether there was a purpose of tax avoidance, the disposition agency made a statement that the amount reverted to the nominal owner OO out of the sales price of the outstanding shares of KRW 4729,000,000,000, and the remaining funds were used for the purpose of repaying the borrowed funds from OO after the claimant was received and repaid from OO. On November 13, 2009, OO made a disposition on deficits of KRW 267,56,90,00 as it decided that the delinquent amount of capital gains tax, securities transaction tax, etc. as of November 13, 2009 was 338,116,70, and there was no ability to pay from OOO, and the credit information was provided to the financial institution. The claimant acquired the title trust shares by participating in the capital increase under the name of OO even if there was no inevitable reason not to make an investment under its own name, and the OO itself has consented to the mutual agreement related to the title trust.

(D) In addition, on February 27, 2006 and on February 28, 2006, 708,466 shares of OO's KOSDAQ (9,715 shares x 36.465 x 2) were changed to those of OO's O on March 22, 2006. The share ratio at the time of entry was 5.75% (708,466 shares/12,313,212 shares) of the O's shares as provided by Article 94 (1) 3 (a) of the Income Tax Act, where a major shareholder who holds more than 5% of the shares of an O-listed corporation sells shares within 00,000,000 O's shares subject to capital gains tax or O's name and 36.0,000,000O's shares and 204,000,000's shares were sold within 5.20,000

(E) The claimant, when the claimant, theOO, and the OO have jointly invested shares, submitted a confirmation document, such as the OO and the OOO, and the representative director requested the applicant to investigate the feasibility of the OO's bypass listing in order for the OO to make an investment. After checking the facts and possibility of bypass listing, the representative director of the OO verified the possibility of bypass listing, the representative director of the OO who conducted the investment (the fact that the OO received from the OO in order to secure the exclusive status in the promotion of bypass listing) and the OO who was an overseas business trip, submitted a confirmation document, etc. of the OO's director in charge of the funds of the OO that lent 1.5 billion won of the OO's funds to the applicant.

(F) In addition, part of the sales price of the stock at issue was used by the OO and the claimant, the OO and the OO used to establish a film production business corporation, and the OO acquired 5.2% of the shares of the OO as collateral and acquired 5.2% of the shares of the OO for the purpose of defending management rights of the OO, and submitted a certified copy of corporate register and a report on the status of possession, such as a certified copy of corporate register, OO shares, etc.

(G) In full view of the above facts and the relevant laws and regulations, it was confirmed that the claimant received 1.5 billion won from OO and used for the acquisition of the OO's outstanding shares in the investigation conducted by the agency, and that the OO acquired the OO's outstanding shares as the fund of the claimant, and the sale or management of the OO's outstanding shares was led by the claimant, the claimant merely claims that the OO or OO has jointly invested the outstanding shares, the OO or OO did not provide specific evidence to prove that the OO's outstanding shares were jointly invested, such as the contract for joint investment, etc., and the OO acquired the 1.5 billion won shares by lending the OO's funds to the OOOO, and the OO was stated that the OO acquired the OO's outstanding shares from the OO to the OO, the OO's comprehensive share swap was not known at the time of the investigation, and the OO's outstanding shares were confirmed's outstanding and outstanding shares.

(3) In relation to the issue ②, the instant disposition is deemed to have transferred the outstanding shares to OO by means of an all-inclusive exchange with the outstanding shares and OO shares, and thus, it is taxed pursuant to Article 35 of the Inheritance Tax and Gift Tax Act, and it is not subject to taxation by deeming it as a deemed donation of title trust property under Article 45-2 of the Inheritance Tax and Gift Tax Act. Thus, the review is omitted.

(4) We examine the issues third.

(A) The claimant asserts that an all-inclusive share swap between a listed corporation and an unlisted corporation shall not be deemed a merger between corporations under Article 38(1) of the Inheritance Tax and Gift Tax Act and Article 28(1) of the Enforcement Decree of the same Act, and thus, gift tax shall not be imposed. However, since the shares at issue are stock exchanges between corporations that are not specially related persons, the relevant provision shall not apply. The case of the Seoul Administrative Court (2009Guhap56129, Sept. 13, 2010) held that the imposition of gift tax on the all-inclusive share swap between the listed corporation and the unlisted corporation shall be consistent with the substance of the transaction that the allocation of new shares by applying Article 39(1)1(c) of the Inheritance Tax and Gift Tax Act is consistent with the substance of the transaction. Accordingly, the disposition agency shall not be governed by Articles 38 and 39 of the Inheritance Tax and Gift Tax Act, since the claimant has appraised the outstanding shares at a high level without justifiable reason, it is difficult to apply the above precedents, etc.

(B) In addition, the claimant shall apply Article 52 of the Corporate Tax Act, not the Inheritance Tax and Gift Tax Act, to the comprehensive exchange of the outstanding shares. Article 26(9) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act stipulates that the transfer value of the claimant's outstanding shares falls under the market price under the Corporate Tax Act and Article 35 of the Inheritance Tax and Gift Tax Act is not applicable. However, Article 26(9) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that since the transaction value is premised on the transaction value falling under the market price under Article 89 of the Corporate Tax Act, the transfer value of the outstanding shares shall not be applicable to this case unless the transaction value of the outstanding shares falls under the market price (referred to in paragraph (d) in relation to this point). Where the claimant takes over or transfers the assets between a person other than the person having a special relationship under Article 35(2) of the Inheritance Tax and Gift Tax Act, and where the claimant takes over or transfers the assets at a remarkably lower price than the market price without any justifiable reason, the difference between such consideration and the market price.

(C) In light of the fact that the claimant's comprehensive exchange of the outstanding shares trades 463,830 won per share to the OO, etc., it is alleged that there is a justifiable reason for the transactional practice. However, in calculating the gift from high-priced transfer, whether there is a justifiable reason for the transactional practice in light of the transactional circumstance, the relationship between the parties to the transaction, and the process of determining the transaction price, etc., the claimant, etc. actively participated in the comprehensive exchange of the outstanding shares for the purpose of right-listed, and there is sufficient probability to have influenced the determination of the share exchange ratio, etc., so it is difficult to deem that the outstanding shares have been transferred to the higher

(D) We examine whether the stock exchange value of 188,657 won per stock on the date of the stock exchange contract by the OO evaluated by the accounting firm can be viewed as the market price.

1) Comprehensive share swap transactions with unlisted and KOSDAQ-registered corporations appear as shown below.

581,576 won (15,950 won x 36.4625)

2) According to the provisions of the Securities and Exchange Act, when referring to the current business plan in 2006 (amended by the direction of the representative director) of the OO which is an outside appraisal organization, the evaluation of the OO's stocks is based on the intrinsic value based on asset value and profit value as shown below, and the OO's profit value is calculated based on the 2005 business year and 2006 business year based on the 1st and October 2005 record, and the evaluation is based on the OO's investigation and investigation office and the OO's answer (amended by October 19, 2009). In light of the 2006 business plan, the OO's official and the 2006 representative director's instruction was issued since October 2005, and the 2006 business plan was prepared with the O's profit value based on the 2006 business plan or the O's profit value (the 2006 O's business plan).4636 o2.46

Details of the result of stock evaluation; and

Assets Value (A) 49,877 Revenue Value (B), 504,955 Value (C) 502,924 (A x (1.5) ±26,924 (A x (D) 86,50 business Value (E) 27,932,920,46C x D30% x 19,553,044,326E x 70%OO 226,047C x 70% x 70% .

* The initial appraised value was 226,047 won per share, but is 188,657 won per share under the direction of the Financial Supervisory Service.

3) The presumption and actual performance of the OO’s revenue value for 2005 and 2006 business year OO’s revenue value are shown as follows: 20.7% (2005 business year) and 83.59% (2006 business year) as shown in the table 4.

Table 4 The presumption of 2005,2006 business year and the difference between the results of OO's 2005,206

(unit: million won, per cent)

(3) The sales revenue of the 2005 business year 8, 3106, 5901, 72020.7 sales revenue of the 2005 business year 8, 3106, 5901, 72020.7 sales revenue of the 2005 business year 6,730-6, 7301,00.00 1,5806, 5895, 7697, 7697, 102, 185, 1812, 324, 1717, 1884, 276, 146, 206, 2006, 1947, 1947, 207, 257, 2017, 257, 307, 1827, 187, 257, 2707, 2757, 2757, 2747

4) In this case, 18,657 won per share of the stock exchange is assessed as KRW 226,047 per share based on the business plan prepared by the representative director under the direction of the OOO on the premise of the stock exchange without objective data and the amount determined as KRW 188,657 per share by the order of the Financial Supervisory Service. As seen above, there is a substantial difference between the cost and the actual performance of the transaction. As such, the calculation of the exchange value based on this, it is difficult to view the market value at the time of the transaction as being appropriately reflected in the intrinsic value of the stock.

(E) We examine whether the average transfer value per share of the outstanding shares transferred by OOO to OO is 463,830 won at the market price as a transaction example.

1) On February 2, 2006, the details on the transfer of the shares of OO, including the shares at issue, to OO are shown as follows.

Table 5 Details of shares of OO on February 2, 2006

(Unit: Won, State)OO 2), the plaintiff andOO 2, the actual owner of the above OO's shares, and 463,830 won, the average acquisition value per share of 89,247 won and 519% higher than that of OO's capital increase at the time of OO's capital increase, are traded in special circumstances for the OO, and it is difficult to recognize the market price as the market price because it is difficult for the claimant, etc. to view that it is more than 245% or higher than the value per share (18,657 won) claimed as a legitimate assessment amount in accordance with the Securities and Exchange Act in relation to the OO's right listing, and that it is more than 50,585 won or more than 916% higher than the appraised amount per share (50,585 won) calculated as a supplementary assessment method in accordance with the Inheritance Tax and Gift Tax Act as the base date for appraisal.

(f) The payment under the Inheritance Tax and Gift Tax Act and the standard date for calculating the market price shall be deemed to be the date of share swap contract (2. 5. 27. 2006) or the date of share exchange (2. 27. 2006).

1) Article 26(8) of the Inheritance Tax and Gift Tax Act provides, “The date of calculating the price and the market price shall be based on the date of liquidation of the price of the pertinent property, but shall be based on the date of the sales contract in cases where it is deemed unreasonable to make the date of calculating the price due to sudden fluctuations in exchange rates after the sales contract.” In principle, the date of calculating the price shall be the date of settlement of the price (in cases of a comprehensive share swap, the date of share swap) and exceptionally, the date of the sales contract shall be limited to only exceptional exchange rate, and “the rapid change in exchange rates, etc.” shall be construed as “the date of liquidation” as “the market price shall be calculated on the basis

2) After the date of concluding a share swap with the OO, the increase in the stock price of the OO appears to be by a share swap contract with the OO, and this cannot be deemed an inevitable external factor, so it is reasonable to view the date of calculating the stock price as the date of share swap.

4. Conclusion

This case shall be decided as ordered in accordance with Articles 81 and 65 (1) 2 of the Framework Act on National Taxes, because the petition for a trial has no merit as a result of the trial.