A. Whether investment in kind in a union constitutes the transfer of assets subject to capital gains tax (affirmative)

(b) Whether a disposition imposing capital gains tax on a person who has invested in kind in a company that newly constructs and sells a tenement house can be imposed double taxation (negative)

A. The assets invested in a cooperative are shared with the assets of the cooperative, separate from the assets of the investor, and the investors acquire the status of the cooperative member in return for the investment. Thus, the investment in kind of assets in a cooperative constitutes the transfer that is a taxable cause for capital gains tax, as the assets provided in the main sentence of Article 4(3) of the Income Tax Act are transferred for the value of the assets provided in the main sentence of Article 4(3) of the Income Tax Act, and it cannot be said that the assets

(b)A project for constructing a new apartment house and selling it in lots is subject to income tax under the Income Tax Act, but its business income shall be calculated based on the purchase price of raw materials provided for in the former part of Article 60(1)1 of the Enforcement Decree of the Income Tax Act and the asset value at the time of the investment in the cooperative corresponding to the incidental expenses. The capital gains accrued by the person who has invested in the cooperative shall be deducted from necessary expenses in calculating the business income of the cooperative. Therefore, the capital gains tax for the invested assets and the burden of the business income of the cooperative shall not be subject

(a) Article 4 of the Income Tax Act; Article 31 of the Income Tax Act; Article 60 of the Enforcement Decree of the Income Tax Act; Article 14 of the Framework Act on National Taxes

A. Supreme Court Decision 84Nu392 delivered on December 26, 1984

[Defendant-Appellant] Lee Jae-soo

The head of North Korean District Tax Office

Daegu High Court Decision 83Gu315 delivered on July 3, 1984

The judgment below is reversed, and the case is remanded to the Daegu High Court.

The grounds of appeal Nos. 1 through 3 of the defendant litigation performer are also examined.

1. According to the reasoning of the judgment below, the court below presumed that the transfer of assets, which are the taxable cause of capital gains tax, is the transfer of assets to another person beyond the control of the transferor, and should be a commercial transfer. In this case, even if the plaintiff entered into a partnership agreement with four non-party et al. to newly build and sell a apartment house, and the plaintiff's member becomes a joint ownership by investing the land owned by the plaintiff in the above partnership, it cannot be allowed for the union members to use and profit from the above assets and profits from the above assets at their own share, and each share cannot be arbitrarily disposed of, and it cannot be deemed that the above invested assets were transferred to other union members beyond the control of the investors under the law. Further, the acquisition by the above investment is nothing more than the status of the union members, and therefore, the transfer of assets cannot be deemed a commercial transfer. Even if the transfer of domestic assets is deemed to be a construction business, the court below ordered the cancellation of the disposition of capital gains tax of this case against the plaintiff as it is not subject to taxation of capital gains tax.

2. However, since assets invested in a cooperative consisting of assets separate from the assets of the investor, and the investors acquire the status of the partner as the consideration for the investment, the investment in kind of assets in a cooperative constitutes the transfer that is a taxable cause of capital gains tax (see Supreme Court Decision 84Nu392 delivered on December 26, 1984). It cannot be said that the use of, profit from, or disposal of shares in, the assets of the cooperative is subject to legal restriction.

In addition, as in the case of this case, the business that newly constructs a tenement house and sells it in lots is a construction business under the Income Tax Act and its income is subject to the income tax. However, the necessary expenses for the business income are calculated on the basis of the purchase price of raw materials provided in the former part of Article 60(1)1 of the Enforcement Decree of the Income Tax Act and the asset value at the time of the investment in the partnership corresponding to the incidental expenses (see Supreme Court Decision 84Nu8 delivered on July 24, 1984). Since the transfer income accrued by the Plaintiff who invested in the partnership is deducted from the necessary expenses for the calculation of the business income of the partnership, the burden of transfer income tax on the above invested assets and the burden of business income

3. Ultimately, the lower judgment, which did not consider the Plaintiff’s act of investing in the instant site as transfer of assets, did not err by misapprehending the legal doctrine on the transfer of assets, which is a cause of taxation of capital gains tax under the Income Tax Act, thereby adversely affecting the conclusion of the judgment

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Il-young (Presiding Justice)