Seocho 208west 3208 (O7, 2009)

Book value in calculating capital gains on non-business land of non-profit corporations

In the transfer of land for non-profit domestic corporations, the book value at the time of transfer of land, etc. can not be interpreted as the larger amount between the book value under the Addenda of the Corporate Tax Act and the value appraised by the current value under the Inheritance Tax and Gift Tax Act on January 1, 191.

The contents of the decision shall be the same as attached.

Article 103 (Special Cases concerning Real Estate Transfer Income of Non-Profit Domestic Corporations)

1. The plaintiff's claim is dismissed.

2. The plaintiff answers the costs of lawsuit.

The defendant's rejection disposition against the plaintiff on August 28, 2008 regarding the tax amount of special taxation on capital gains for the business year 2007 shall be revoked.

1. Details of the disposition;

A. On March 29, 1952, the Plaintiff, a non-profit corporation established for the purpose of scholarship subsidization, etc. on October 15, 1971, transferred ○○○○○-si ○○○○-si 53-5 forest land 271,171 square meters, 53-68 forest land 102,087 square meters in this Ri, and 230 square meters in this Risan-7 land 916-7 square meters (hereinafter referred to as “instant land”) to the Korea Culture and Arts Diplomatic Association on December 7, 2007, 3,900,000,000 won.

B. On March 31, 2008, the Plaintiff reported and paid corporate tax of KRW 143,549,350 calculated by including the income accrued from the disposition of the instant land in the income for the business year 2007 and corporate tax of KRW 1,169,661,048 (the amount of transfer of the instant land 3,90,000,000, less the book value of KRW 1,129,838,000, less the book value at the time of transfer 3,898,870,162) and KRW 1,313,210,398,398,000, which is calculated in accordance with the provisions of Article 55-2 of the Corporate Tax Act (the amount calculated by multiplying the tax rate of KRW 30% by the transfer value at the time of transfer).

C. On April 16, 2008, the Plaintiff reported and paid the transfer margin of the land of this case from the transfer amount less the book value at the time of transfer by filing corporate tax return on the transfer margin of the land of this case on April 16, 2008, but filed a claim for correction to the effect that the amount to be deducted from the transfer amount would be the larger amount between the book value under Article 8(2) of the Addenda of the Corporate Tax Act (Act No. 5581, Dec. 28, 1998) and the appraised amount under the Inheritance Tax and Gift Tax Act as of January 1, 1991, the larger amount between the book value and the 2,314,475,600 won, i.e., the 2,314,475,600 won, which is the appraised amount under the Inheritance Tax and Gift Tax Act as of January 1, 199.

D. On August 23, 2008, the defendant rejected the plaintiff's request for correction on the ground that the provisions of Article 8 of the Addenda of the Corporate Tax Act (Act No. 5581, Dec. 28, 1998) applies only to the calculation of income from profit-making business under the non-profit domestic law, and thus applying the special provisions of taxation on capital gains, such as land under Article 55-2 of the Corporate Tax Act, is unfair (hereinafter "the disposition of refusal").

[Ground of recognition] Facts without dispute, Gap 1, 2 evidence, Eul 1 to 4 evidence (including each natural disaster) and the purport of the whole pleadings

2. Whether the rejection disposition of this case is legitimate

A. The plaintiff's assertion

(1) In the transfer of non-business land of a non-profit domestic corporation, it is reasonable to interpret that "the book value at the time of transfer" to be deducted from the transfer amount of land, etc. as stipulated in Article 55-2 (6) of the former Corporate Tax Act (amended by Act No. 8831 of Dec. 31, 2007) can be interpreted as "the larger amount between the book value and the value appraised by the value under Articles 60 and 61 (1) through (3) of the Inheritance Tax and Gift Tax Act as of January 1, 1991 pursuant to Article 8 (2) of the Addenda of the Corporate Tax Act (Act No. 5581, Dec. 28, 1998).

(2) Article 55-2 (1) 3 of the Corporate Tax Act (amended by Act No. 7838 of Dec. 31, 2005) newly establishes a tax provision on capital gains on land for non-business of a corporation, such as land, and thus, Article 168-14 (3) 2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618 of Feb. 22, 2008) does not stipulate any provision on the transfer of land for non-business owned for 20 years or longer, such as woodland owned for 20 years or longer, and any provision on the exclusion or postponement of taxation is contrary to the principle of equality and the principle of proportionality under the Constitution, contrary to the transfer by an individual.

(3) Under the previous special surtax system of the Corporate Tax Act, the date of acquisition was deemed as January 1, 1985 by replacing the real estate acquired on or before January 1, 1985. However, even though the Corporate Tax Act did not stipulate the date of fictitious acquisition at the time of the refusal of this case, the book value on October 15, 1971 was additionally applied.

(b) Related statutes;

It shall be as shown in the attached Form.

C. Determination

(1) Where a non-profit domestic corporation transfers land for non-business use, whether the book value as at the time of transfer can be determined pursuant to Article 8(2) of the Addenda of the Corporate Tax Act (Law No. 5581, Dec. 28, 1998, etc.)

(A) Where a domestic corporation transfers land, etc., the Corporate Tax Act provides that the transfer value shall be calculated as earnings and the corporate tax on income for each business year shall be reported and paid as deductible expenses at the time of transfer (in the case of a nonprofit corporation, the larger of the appraised values under the Inheritance Tax and Gift Tax Act), and Article 55-2 of the Corporate Tax Act separately provides that the corporate tax on income for each business year shall be calculated as "corporate tax on income from land, etc." and it shall be additionally paid as "corporate tax on income from each business year". In the case of a non-profit domestic corporation transfers land, etc., the amount of income from the disposal of fixed assets (the larger of the book value and the appraised values under the Inheritance Tax and Gift Tax Act) shall be calculated as "corporate tax on capital gains from land, etc. (the transferred value - the book value)" and the method of additionally paying the corporate tax on capital gains from transfer (the amount of special taxation on capital gains from non-profit corporations)" as "corporate tax on capital gains from transfer".

(B) Meanwhile, Articles 99 through 108 of the former Corporate Tax Act stipulate that "special surtax shall be imposed on capital gains from the transfer of a corporation's land, etc." However, upon the amendment of the Corporate Tax Act by Act No. 6558 on December 31, 2001, the said special surtax shall be abolished and the provisions of Article 55-2 of the Corporate Tax Act (Special Taxation on Capital Gains from Transfer of Land, etc.) shall be newly established in order to impose the corporate tax on the land, etc. in the land of the land of the land of the land of the land of the land of the land of the land of the land of the land of the land of the land of the land of the land of the land of the land of the land of the specific housing of the amendment of the Corporate Tax Act by Act No. 705 on December 30, 203, after the amendment of the Corporate Tax Act by Act No. 7838 on December 31, 2005, the land of the non-business (transfer from January 1, 2007) subject to taxation.

(C) In light of the legislative purport and the form of the above provision of the Corporate Tax Act, it is reasonable to deem that Article 8 (2) of the Addenda of the Corporate Tax Act (Act No. 5581, Dec. 28, 1998) applies to the calculation of losses (book value) that are deducted from the gains (transfer value) when calculating the income for each business year of a nonprofit corporation. Therefore, in calculating the transfer income under the special provision on taxation of transfer income of land, etc., the book value at the time of transfer shall not be determined pursuant to Article 8 (2) of the Addenda of the Corporate Tax Act (Act No. 5581, Dec. 28, 1998).

(2) Whether Article 52-2(1)3 of the Corporate Tax Act is unconstitutional

As seen above, by abolition of special surtax on capital gains from the transfer of land, etc. of a corporation on December 31, 2001 and establishment of the provisions of Article 55-2 of the Corporate Tax Act (Special Taxation on Capital Gains from Transfer of Land, etc.) so that a corporation can flexibly cope with changes in the real estate market, such as speculation, etc. on December 31, 2005. By adding non-business land under Article 5-2(1)3 of the Corporate Tax Act on December 31, 2005 to the subject of taxation, the corporation should not use land for productive purposes, but impose corporate tax on a corporation using land as means of property increase, thereby stabilizing the real estate market and recovering speculative profits. The Corporate Tax Act does not apply mutatis mutandis to the criteria for determining non-business land to the extent that it is difficult to view that a corporation and an individual imposed the same taxation as the same standard on the transfer of land for non-business purposes depending on the nature of the corporation and the principle of proportionality under Article 201-28 of the former Enforcement Decree.

(3) Whether the retroactive application is unlawful or not

As alleged by the Plaintiff, even if the Corporate Tax Act at the time of the instant refusal disposition did not provide for the provisions on the date of fictitious acquisition, and thus, the book value of the instant land was applied on October 15, 1971, the new law enacted with respect to the facts completed prior to the enforcement of the said Act is not applied, and thus, it cannot be deemed as a retroactive application of the said Act or a retroactive legislation, and it is difficult to deem otherwise that there was a trust to protect the Plaintiff

3. Conclusion

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