Income tax and 383 (Occ. 26, 2010)

Income;

Where a converted maintenance and improvement project association reports the tax base and amount of tax by applying the Income Tax Act, the entry of books shall be recorded in accordance with Article 160 of the same Act.

In the case of E-Question, where a converted association for maintenance and improvement projects under Article 104-7 of the Restriction of Special Taxation Act files a return on the tax base and amount of tax by applying the Income Tax Act, the entry of books shall be recorded in accordance with Article 160 of

Special Taxation for Maintenance and Improvement Project Cooperatives under Article 104-7 of the Restriction of Special Taxation Act

(Articles 100 and 100)

1. A summary of the contents of inquiry;

○ Facts

According to Article 104-7(2) of the Restriction of Special Taxation Act, the Corporate Tax Act applies to a reconstruction association deeming it as a non-profit domestic corporation;

- The Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents is to apply the Income Tax Act by deeming the partnership project association and its members as joint business place and joint business place in accordance with the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents as a reconstruction association authorized by the former Housing Construction Promotion Act before June 30, 20

-in the case of nonprofit corporations, separate accounting of profit-making business and other business is required under Article 76 of the Enforcement Rule of the Corporate Tax Act;

· If the income tax is applied like the foregoing, it is not clear that the separate accounting provision for the profit-making business and other business is made in the Income Tax Act.

○ Contents of questioning

- Where a converted partnership falls under a joint business place under the Income Tax Act pursuant to Article 104-7 of the Restriction of Special Taxation Act;

· Whether the converted partnership applies the Corporate Tax Act at the time of bookkeeping?

2. Materials on the contents of questioning;

(a) related tax laws and regulations (law, enforcement decree, enforcement rule, basic rules);

○ Article 104-7 of the Restriction of Special Taxation Act 【Special Taxation for Consolidation Project Cooperatives】

(1) Notwithstanding Article 2 of the Corporate Tax Act, the Income Tax Act shall apply to a reconstruction association which has obtained authorization for establishing an association under Article 44 (1) of the Housing Construction Promotion Act (referring to the Act prior to amendment by Act No. 6852) before June 30, 2003, and which has been registered as a corporation under Article 18 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereafter referred to as "converted maintenance and improvement project association" in this Article), deeming its conversion and its members as a joint business place and joint business place under Articles 87 (1) and 43 (3) of the Income Tax Act, respectively: Provided, That the same shall not apply where a converted maintenance and improvement project association files a report on the tax base and tax

(2) Notwithstanding Article 1 of the Corporate Tax Act, a cooperative established under Article 18 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (referring to a cooperative for maintenance and improvement projects; hereafter referred to as "cooperative for maintenance and improvement projects" in this Article) shall be deemed a non-profit domestic corporation until the business year ending on or before December 31, 2010 and subject to the Corporate Tax Act (excluding Article 29 of the same Act). In such cases, it shall be limited to cases where a conversion and improvement

(3) The land and buildings (limited to those constructed by implementing the relevant improvement project; hereafter the same shall apply in this Article) that a maintenance and improvement project association supplies to its members pursuant to the management and disposal plan after completing construction works for the relevant improvement project pursuant to the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents shall not be deemed the supply of goods under Article 6 of the Value-Added

(4) Where a maintenance and improvement project partnership has transferred the ownership of land and buildings created by the implementation of the relevant maintenance and improvement project to another person in accordance with the management and disposal plan and distributes or transferred the remaining assets without paying the national taxes, additional dues or disposition fees for arrears to be paid by the relevant maintenance and improvement project partnership, where the amount to be collected is short of the amount to be collected even after the execution of disposition on default to the relevant maintenance and improvement project partnership, the person who has received the allocation or transfer of the remaining assets shall assume secondary tax liability for such shortage

(5) In the application of paragraph (2), necessary matters concerning the scope of the business excluded from the scope of taxable income under Article 3 of the Corporate Tax Act to a maintenance and improvement project association shall be prescribed by Presidential Decree.

○ Article 87 of the Income Tax Act 【Special Cases for Joint Business Place】

① 공동사업장에서 발생한 소득금액에 대하여 원천징수된 세액은 각 공동사업자의 손익분배비율에 따라 배분한다.

②제81조제1항 및 제3항부터 제11항까지와 제158조에 따른 가산세로서 공동사업장에관련되는 세액은 각 공동사업자의 손익분배비율에 따라 배분한다.

(3) Articles 160 (1) and 168 shall apply to a joint business place by deeming it as one businessman.

○ Article 43 of the Income Tax Act 【Special Cases concerning Calculation of Income Amount on Joint Business】

(1) In the case of a joint business (including a joint business in which there are the joint joint business operators prescribed by the Presidential Decree (hereinafter referred to as the “joint business operators”) which jointly runs a business generating business and distributes the profits and losses, the place where the business is operated (hereinafter referred to as the “joint business operators”) shall be considered as one resident, and the amount of income shall be calculated by the joint business

② 제1항에 따라 공동사업에서 발생한 소득금액은 해당 공동사업을경영하는 각 거주자(출자공동사업자를 포함한다. 이하 "공동사업자"라한다) 간에 약정된 손익분배비율(약정된 손익분배비율이 없는 경우에는 지분비율을 말한다. 이하 "손익분배비율"이라 한다)에 의하여분배되었거나 분배될 소득금액에 따라 각 공동사업자별로 분배한다.

③거주자 1인과 그와 대통령령으로 정하는 특수관계에 있는 자가 공동사업자에 포함되어 있는 경우로서 손익분배비율을 거짓으로 정하는 등 대통령령으로 정하는 사유가 있는 경우에는 제2항에도 불구하고 그 특수관계자의 소득금액은 그 손익분배비율이 큰 공동사업자(손익분배비율이 같은 경우에는 대통령령으로 정하는 자로한다. 이하 "주된 공동사업자"라 한다)의 소득금액으로 본다.

○ Article 160 of the Income Tax Act 【Keeping and recording of books】

(1) A business operator shall keep evidentiary documents, etc. to calculate the amount of income and keep and manage books by double entry so that all transactions related to his/her business can be grasped objectively.

(2) Where a business operator below a certain scale by type of business prescribed by Presidential Decree in consideration of the type, scale, etc. of a business, keeps simple books prescribed by Presidential Decree (hereinafter referred to as "Simple books") and enters faithfully the transaction details of such business, he/she shall be deemed to keep and record books under paragraph (1

(3) A business operator under the size specified by Presidential Decree by type of business pursuant to paragraph (2) shall be construed as "person subject to simple bookkeeping" and a business operator other than a person subject to simple bookkeeping shall be construed

(4) In case of paragraph (1) or (2), any businessman who includes any income accruing from the real estate rental business, shall manage the accounts by dividing it by income. In this case, the common income amount classified by income and the common expenses corresponding to such common income amount shall be divided into the amount and entered in the books in proportion to the total income amount.

(5) In the case of two or more places of business, the account books shall be kept so that transaction details may be differentiated.

(6) With respect to the stocks or equity shares transferred by a major shareholder of a corporation (including small and medium enterprises), the details of transactions, etc. by each date of transactions shall be recorded and managed in the books, as prescribed by Presidential Decree, and the certificates, etc. thereof shall be kept: Provided, That where the statements of transactions issued by an investment trader or investment broker under the Financial Investment Services and Capital Markets Act are kept, such books shall be kept and recorded.

(7) Matters necessary for the recording and keeping of books and evidential documents under paragraphs (1) through (5) shall be prescribed by Presidential Decree.

○○ Division of Non-resident, etc. under Article 161 of the Income Tax Act (amended by December 31, 2009)

Any person who intends to have any income tax reduced or exempted pursuant to Article 59-2 (1) 2 (Article 13 before the amendment of Act, December 31, 2009) shall record such reduced or exempted income and other income in the account book separately.

【Tax reduction or exemption】

(1) Where any of the following incomes exists in global income, an amount calculated by multiplying the relevant amount of global income by the ratio of the amount of wage and salary income or business income to the amount of global income shall be reduced or exempted:

1. Pay received by a foreigner dispatched to Korea under an agreement between the Governments from both or one of the Governments of either Party;

2. Income earned by a resident who does not have the nationality of the Republic of Korea or a nonresident (hereinafter referred to as "nonresident, etc.") from a foreign navigation business of ships and aircraft prescribed by Presidential Decree: Provided, That this shall only apply where the same exemption is granted to ships and aircraft operated by Korean nationals in the country of nationality of the nonresident, etc

(2) Even if income tax is reduced or exempted under Acts other than this Act, the income tax calculated by applying mutatis mutandis paragraph (1) shall be reduced or exempted, except as otherwise prescribed by such Acts.

○ Enforcement Decree of the Income Tax Act 【Calculation, etc. of Common Profit and Loss】

(1) Where a person concurrently operates a business eligible for reduction or exemption under Article 13 (1) of the Act (Article 59-2 of the Act after the amendment of December 31, 2009) or other business under other Acts, the reduction or exemption business and other common necessary expenses and common income amount for such business shall be separately calculated, as prescribed by Ordinance of the Ministry of Strategy and Finance.

(2) In keeping separate accounting under Article 161 of the Act, the method of calculating assets, liabilities, and profits and losses shall be prescribed by Ordinance of the Ministry of Strategy and Finance.

【Calculation of Common Profit and Loss and Separate Accounting】 Article 96 of the Enforcement Rule of the Income Tax Act

(1) In cases of concurrently running a business, the income tax of which is reduced or exempted under the Act and Acts referred to in Article 3 (1) of the Restriction of Special Taxation Act (hereafter referred to as the "Act" in this Article), the reduction or exemption business and other common income amount of the business and the common necessary expenses for the business shall be calculated separately according to the standards in the following subparagraphs: Provided, That where there is no individual necessary expenses (referring to the total amount of necessary expenses other than common necessary expenses; hereafter the same shall apply in this Article) or it is impossible or unreasonable to apply the provisions in the following subparagraphs for other reasons, the calculation shall be made based on the working hours, hours of use, area to be used,

1. The common income amount from the reduced and exempted business and other business shall be calculated in proportion to the total income amount of the business;

2. Where the reduction and exemption projects and other business categories are the same, the common necessary expenses shall be calculated in proportion to the total income amount of the business concerned.

3.If the reduction and exemption projects and other projects are not the same, the common necessary expenses shall be calculated in proportion to the reduction and exemption projects and to the individual expenses of the other projects.

(2) The division of accounting under the Act and the Restriction of Special Taxation Act shall be the keeping of the gross income and necessary expenses by the business or revenue which must be classified under the relevant provisions in the separate account in the book, respectively: Provided, That the same shall not apply to the gross income and necessary expenses which are common to each business or revenue.

[Separate Accounting] Article 113 of the Corporate Tax Act

(1) Where a nonprofit corporation operates a profit-making business, it shall keep separate accounting of assets, liabilities, and profits and losses to the profit-making business and those belonging to other business than the profit-making business.

(6) The method of separate accounting under the provisions of paragraphs (1) through (5), judgment on corporations operating the same business and other necessary matters shall be prescribed by Presidential Decree.

[Separate Accounting] Article 156 of the Enforcement Decree of the Corporate Tax Act

(1) A corporation falling under the provisions of Article 113 (1) through (5) of the Act shall keep separate accounting of assets, liabilities, and profits or losses for each business or property to be separated from each other in the account books of the corporation, as provided for by Ordinance of the Ministry of Strategy and Finance.

【Separate Accounting by Non-profit Corporation】 Article 76 of the Enforcement Rule of the Corporate Tax Act

(1) Where a nonprofit corporation maintains separate accounting under the provisions of Article 113 (1) of the Act, the assets and liabilities common to profit-making business and other business shall be deemed as belonging to profit-making business

(2) Where a nonprofit corporation maintains separate accounting, the total amount of liabilities (including allowances) deducted from the total amount of assets for profit-making business shall be the capital for profit-making business.

(3) Where a nonprofit corporation has disbursed or transferred any assets belonging to other business for profit, the value of such assets shall be accounted for as the original capital. In this case, the value of assets shall be the market price.

(4) Where a nonprofit corporation has disbursed assets belonging to a profit-making business or any other business, the amount in excess of the income amount (including surplus funds) of the profit-making business shall be returned to the amount of its capital input. In such cases, where a corporation to which the provisions of Article 74 (1) 1 of the Restriction of Special Taxation Act applies transfers assets belonging to the accounting of profit-making business to the

(5) The bookkeeping of the book as provided in Article 112 of the Act in the case of a nonprofit corporation shall be in accordance with paragraphs (1) through (4).

(6) In case where the nonprofit corporation separate accounting of profit and loss from a profit and loss from a profit and loss from a profit and loss from a profit and loss from other business pursuant to the provisions of Article 113 (1) of the Act, the common earnings and loss shall be calculated in accordance with the provisions of each of the following subparagraphs: Provided, That where there is no individual loss (referring to the total amount of losses other than common loss; hereafter the same shall apply in this Article) in calculating the division of profit and loss from a profit and loss, or where it is not applicable or it is unreasonable to apply the provisions of the following subparagraphs due to any other reason, the division shall be made in accordance

1. Common gross income of profit-making businesses and other businesses shall be calculated in proportion to the revenue amount or turnover of profit-making businesses; and

2. Where the profit-making business and other business are identical, the common deductible expenses shall be calculated in proportion to the revenue or sales of the profit-making business and other business.

3. Where the type of profit-making business and other business are different, the common deductible expenses shall be calculated in proportion to the amount of individual deductible expenses of profit-making business and other

(7) Common earnings under paragraph (6) shall be limited to those which form the tax base, and the common losses shall be limited to those corresponding to the gross income.

(b) Relevant cases (judicial precedents, judicial precedents, review precedents, and established rules);

○ Income 4601-341, November 12, 1999

The separate entry under the provisions of Article 161 of the Income Tax Act shall not apply to the case of a housing reconstruction association which separates the reduced or exempted income and other income when concurrently operates the business for which income tax reduction is granted under the provisions of Article 3 (1) of the Income Tax Act and the Restriction of Special Taxation Act.

○ document 2 teams-2056, November 12, 2007

Income accrued from profit-making business under the subparagraphs of Article 3 (2) of the Corporate Tax Act shall fall under the income of a non-profit corporation for each business year, and the tax rate under Article 55 of the same Act shall apply to the tax base on the relevant income. In addition, for profit-making business and other business of a non-profit corporation, the separate accounting shall be conducted in accordance

○ Written 2 Team-128, 2005.07.19

2. Where a reconstruction association divides common construction cost into revenue business and non-profit-making business, the common construction cost shall be calculated in proportion to the revenue amount or sales amount of the profit-making business and other business where the profit-making business and other business are identical under Article 76 (6) 2 of the Enforcement Rule of the Corporate Tax Act;

○ document1 team-942, 2005.07.29

In a case where the Income Tax Act is applied by deeming either a partnership for maintenance and improvement projects established under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents and their members as a joint business place and joint business place under Articles 87(1) and 43(3) of the Income Tax Act, as a partnership for the conversion of a partnership for maintenance and improvement projects established under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents and their members, respectively, as a joint business place and joint business place under Articles 87(

The amount of sales price separately paid by the association members who acquire a house exceeding their own shares in accordance with the rules and regulations of the association, and the remaining house and commercial house sales price sold to the general public other than the association members are the income of the joint business

위의 경우 동 공동사업장의 소득금액은 소득세법 제2조 및 같은법 제43조의 규정에 의하여 공동사업자의 지분이나 손익분배비율에 의하여 분배되었거나 분배될 소득금액에 따라 각 거주자별로 그 소득금액을 계산하여 납세의무를 지는 것임.