Law Firm 46012-463 (Law Firm 03.02)

special provisions

Where the corporation which has appropriated the special depreciation expenses as the deductible expenses by the method of report and adjustment, conducts a revaluation of the relevant assets under the Assets Revaluation Act, the matters of tax adjustment related to the report and adjustment of the special depreciation expenses shall be considered to have ceased to exist after

In the case of your interpellation, if a corporation which has appropriated special depreciation expenses under Article 18 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4806 of Dec. 22, 1994) as the deductible expenses by the method of report and adjustment, conducts revaluation of the relevant assets under the Assets Revaluation Act, the matters of tax adjustment related to the report and adjustment of special depreciation expenses shall be considered to have expired after the date of revaluation.

Article 18 of the former Regulation of Tax Reduction and Exemption Act

1. Summary of questioning;

The case where the corporation which has appropriated special depreciation costs as the costs under the provisions of §18 (Transfer 94.12.31) has been duly revaluated under the Reassessment Act as of July 1, 200, while the special depreciation reserves to be returned remain.

Tax treatment for the unclaimed special depreciation reserve at the time of settlement of accounts in 2000.

2. Materials on the contents of questioning;

(a) Related statutes;

Article 26 (Calculation of Scope of Depreciation Amount)

(1) "Amount calculated as prescribed by Presidential Decree" in Article 23 (1) of the Act means the amount calculated by the method reported by a corporation to the head of the district tax office having jurisdiction over the place of tax payment (hereinafter referred to as "scope of depreciation") among the depreciation methods classified by each of the following subparagraphs by individual depreciable assets:

1. With respect to buildings and intangible fixed assets (excluding mining rights under subparagraph 3), the fixed amount method (No. 31 December 31, 98);

2. Dec. 31, 98, fixed rate method or fixed rate method (amended by December 31, 998), for the tangible fixed assets (excluding the tangible fixed assets for mining under subparagraph 4);

3. With respect to mining rights (including the gathering right under the Submarine Mineral Resources Development Act), production sharing method or equal installment methods (amended by December 31, 98);

4. Product sharing method, fixed rate method or fixed amount method (amended by December 31, 98), with respect to tangible fixed assets for mining;

(2) The depreciation methods under the provisions of each subparagraph of paragraph (1) shall be as follows:

1. Fixed amount method: Depreciation method of uniformly applying the allowed depreciation amount for each business year, calculated by multiplying the acquisition value of the concerned depreciable assets (referring to the acquisition value under the provisions of Article 72; hereafter in this Article the same shall apply) by the depreciation rate in accordance with the lifespan of the concerned assets (it shall be amended on December 31, 98);

Article 72 (Acquisition Value, etc. of Specialized Infrastructure Assets)

(1) The acquisition value of assets under Article 41 (1) and (2) of the Act shall be the amount falling under each of the following subparagraphs:

1. Assets purchased from a third person: Acquisition tax and registration tax on the purchase price;

3. The amount in excess of the market price under Article 88 (1) 1 (amended on December 31, 98).

4. Acquisition tax (amended by December 31, 998) that is not included in the calculation of losses under the provisions of subparagraph 3 of Article 21 of the Act.

(4) The acquisition value of assets held by a corporation where causes falling under any of the following subparagraphs occur shall be as follows:

1. In case of evaluation under the provisions of each subparagraph of Article 42 (1) and (3) of the Act, such evaluation amount;

(b) Relevant established rules;

○ Corporation 46012-2387, December 15, 200

With respect to a corporation whose cumulative effects are accounted as an increase of carried-over retained earnings according to the corporate accounting standards by changing the depreciation method from the fixed rate method to the fixed rate method, where the corporation disposes of carried-over retained earnings in the gross income or other disposition through the tax adjustment, and where the relevant assets are revaluated pursuant to the Assets Revaluation Act after reserving the amount of depreciation costs in the deductible expenses, the above tax adjustment items shall be

○ Corporation 46012-3919, December 15, 1998

The amount of depreciation in cases where there is any disapproved depreciation amount under Article 55-2 of the Enforcement Decree of the Corporate Tax Act prior to the revaluation of the assets revaluated under the Assets Revaluation Act shall be calculated by calculating the revaluated amount as the basis amount, and the constructive amount of depreciation shall be deemed extinguished, and no separate tax adjustment shall be made.