early 209 middle 2455 ( December 24, 2009)

This transaction amount cannot be recognized as the market price because it falls under objectively improper cases.

Generally, the stock transaction is determined based on the corporation's assets and liabilities, and the transaction price of this case is determined as the face value without reflecting the corporation's asset value, etc., and the transaction price of this case is objectively unfair. Thus, this transaction price cannot be recognized as the market price.

2010Guhap1402 Revocation of Disposition of Imposition of Gift Tax

x 2 others

Deputy Director of the Tax Office

May 3, 2012

May 24, 2012

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

① The Defendant’s imposition of gift tax of KRW 00 on November 3, 2008 against Plaintiff A, ② KRW 000 on November 1, 2008 against Plaintiff BB, and ③ on November 3, 2008, of KRW 000 on the gift tax against Plaintiff KimCC is revoked (it is apparent that the amount imposed against Plaintiff AA and KimCC is a clerical error in light of the respective descriptions in subparagraphs 1 and 3 of Article 22).

1. Details of the disposition;

A. As of December 31, 2004, the Plaintiff A, KimCC, Nonparty D, and EE were currently holding 260,000 shares issued by Nonparty XX Industry Development Co., Ltd. (hereinafter referred to as “Nonindicted Co., Ltd.”), respectively. On September 9, 2005, the Plaintiff Nonparty A and EB acquired 25,00 shares (60 shares) from each of the above shares owned by Nonparty A and E, respectively. The Plaintiff’s shares were divided into 52,00 shares (20 shares issued (20% of the shares issued, 600 shares owned, 13,00 shares owned, 13,00 shares owned) and the Plaintiff B acquired 78,00 shares (30 percent of the shares issued, 600 shares owned, 13,00 shares owned) per share).

B. After December 31, 2005, the non-party company shares issued by the non-party company as of December 31, 2005 increase mainly by 4.60,000 shares issued by the non-party company, and the non-party company shares 207,00 shares (45%) among them, the non-party company shares 138,00 shares (30%) and the non-party company shares 11,00 shares (25%). The non-party company shares and the non-party company shares owned by the non-party company 234,60 shares totaling 27,60 shares owned by the non-party company CC and the non-party company's shares owned by the non-party company 234,60 shares (51% shares issued by the non-party 2,48% shares among them, and 3% shares acquired in the name of ParkD and 3% shares acquired in the name of the non-party 1,007 shares were transferred to the non-party 2010 shares.

C. With respect to the acquisition of shares by the Plaintiff A and B on September 9, 2005, the Defendant assessed the shares of the non-party company as KRW 000 per share by applying a supplementary evaluation method under Article 60(3) of the Inheritance Tax and Gift Tax Act with respect to the shares of the non-party company, and assessed the difference between the evaluation amount and the acquisition amount on November 1, 2008 by deeming that the above plaintiffs were donated to the above plaintiffs, and assessed the gift amount of KRW 00 on November 1, 2008 - [100 - 00 - 13,000 won + 13,000 won (acquisition from EE) - 00 won on November 3, 2008 - 100 won on each of the gift amount of KRW 5,500 - 00 - 00 won on each of the above shares of the plaintiff to the non-party company.

D. In relation to the transfer of shares by Plaintiff KimCC on July 11, 2007, the Defendant assessed Nonparty Company’s shares as KRW 0 per share by applying a supplementary evaluation method under Article 60(3) of the Inheritance Tax and Gift Tax Act, and deemed that the difference between the evaluation amount and the transfer price was donated to the said Plaintiff, on November 3, 2008, imposed KRW 000 on Plaintiff KimCC (=100 x (00 won - 00 won) - 000 won) (hereinafter “each of the instant dispositions”).

E. In response to the plaintiffs' objection, the plaintiffs Lee Dong and LeeB filed a request for a trial with the Tax Tribunal on June 1, 2009, respectively, on February 3, 2009. However, on December 24, 2009, the request for a trial was dismissed. The plaintiff KimCC filed a request for a trial with the Tax Tribunal on July 3, 2009 through an objection on March 9, 2009. However, on December 31, 2009, the request for a trial was dismissed.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 5, Eul evidence Nos. 1, 2, 3, 7, 8, 9, 14, 17, 18, 21 and 22 (including each number), and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiffs' assertion

(1) Although the plaintiffs traded shares through a reasonable method and price under transaction practices and social norms, it is unlawful that the defendant did not recognize the acquisition price of the plaintiffs' shares as the market price or legitimate transaction price.

(2) The supplementary assessment method applied by the Defendant to the appraisal of shares of the non-party company is unlawful as it did not take into account the economic reality, by applying the unilateral calculation method to the corporation as deficit and by failing to take into account the change

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Whether the acquisition price of the Plaintiffs’ shares is recognized as the market price or reasonable transaction price

(A) According to Article 60(2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter the same shall apply) and Article 35(1) of the Enforcement Decree of the Act (amended by Presidential Decree No. 20720, Feb. 29, 2008; hereinafter the same shall apply), the market price shall be the value generally recognized as the market price in cases of free transactions between many and unspecified persons, including those recognized as the market price in accordance with Presidential Decree, such as the value of expropriation, public auction, and appraisal value, and if there is a fact of sale of the pertinent property, the transaction price shall be the market price, but if it is deemed that the transaction price is objectively unjust, it shall not be recognized as the market

In light of the above evidence and evidence, the above 4, 5, 6, 10, 11, 12, 19, and 20 (including each number) transaction value of the above 7.0% shares were no more than 5% of the total market value of the above 7.0% shares transaction, and the above 2.0% of the shares transaction value was no more than 30% of the shares transaction value of the above 20.0% of the shares transaction (the above 207.0% of the shares transaction value was no more than 30% of the shares transaction value of the above 205.0% of the shares transaction value was no more than 30% of the shares transaction value of the above 207.0% of the shares transaction value was no more than 30% of the shares transaction value of the plaintiff 2.0% of the shares transaction value of the above 205.3% of the shares transaction value of the above 30.0% of the shares transaction value of the above 20.

(B) Meanwhile, the plaintiffs asserted that, while the non-party company discontinued its business on April 15, 2003 and started its business on November 30, 2004 after opening the hotel, the non-party company suffered losses in 2004, but since 2005, the sales increase since 2005, the transaction of acquiring shares was conducted on September 9, 2005 with EE, E and D demanded the acquisition of shares in order to raise additional investment funds for hotel business. The sales on December 31, 2006, the hotel business entered the hotel business on or after opening the business, the plaintiff KimCC presented the trading value above the above FF amount on November 30, 204, but the transaction value was set to the non-party company's legitimate transaction value on or after the above FF amount on or below the face value on the grounds that the transaction value was set to the non-party company's maximum trading value on or below the above 200 billion won on the ground that it offered the above FF amount on the market value.

First of all, it is difficult to view that the business has been improved since September 9, 2005 due to the increase in sales since 2005 among the reasons alleged by the plaintiffs as reasons for the acquisition of shares, and therefore it is difficult to view that the business has been improved due to the increase in sales since 2005 of the reasons for the plaintiffs' assertion, and therefore, it constitutes only "E and DoD demanded the plaintiff to acquire shares in order to raise additional investment funds for hotel business." However, in addition to the statement in subparagraph 6, considering the whole purport of pleading in the statement in subparagraph 6, the non-party company suffered a loss equivalent to KRW 00,000 from the business income in 204 and 203, it is difficult to view that the net asset value of the non-party company is equivalent to KRW 00,000, and the net asset value per share is considerably below the net asset value per share, and the appraisal value of the non-party company is considerably below the net asset value per share of KRW 100,005.

Next, considering that the acquisition by transfer of shares on July 11, 2007 included the above transfer of shares on July 11, 2007 between the Plaintiff A, B and CC, the non-party company had already been in capital impaired in the loss of business income for three consecutive years, and that the distribution debt and total debt up to the distribution assets and total assets, the net asset value per share was assessed as zero won in both net profit and loss and net asset value. Meanwhile, unlike the acquisition by transfer of shares on July 11, 2007, it is difficult to view that the purchase by transfer of shares on July 11, 2007 included the above transfer of management right or gold bonds (as approximately KRW 5.4 billion), it is difficult to view that there was no justifiable reason to recognize that there was a considerable increase in the sale price of shares by Nonparty 31, 206, or that there was no justifiable reason to recognize that there was a transaction price.

(C) Therefore, the plaintiffs' assertion on this issue is without merit.

(2) Whether the application of complementary evaluation methods is legitimate

As seen earlier, it is difficult to view the transfer price of the shares of the non-party company as the market price, and there is no example in the transaction that can be seen as properly reflecting the objective exchange value of the non-party company's shares in this case, and there is no appraisal value assessed in an objective and reasonable manner. Thus, it is difficult to calculate the market price of the non-party company's shares because of the absence of appraisal value assessed in an objective and reasonable manner. In such a case under Article 60 (3) of the Act, it is reasonable to assess the value of the non-party shares applicable to the transaction by applying Article 63 (1) (c) of the Act and Articles 2

In addition, the plaintiffs argued that it is illegal to apply the supplementary evaluation method in this case as the major type of business of the non-party company was changed. However, it is not illegal to apply the supplementary evaluation method in this case. However, it is not possible to apply the supplementary evaluation method in this case because it falls under the case of "the case where normal sales occur less than 3 years in the major type of business" under Article 17-3 (1) 7 of the Enforcement Rule of the Act (amended by Ordinance of the Ministry of Strategy and Finance No. 20 of April 30, 2008) and Article 56 (1) of the Enforcement Decree of the Act is not based on the weighted average amount of net profits and losses per share for the last 3 years under subparagraph 1 but can only be based on the constructive average amount of net profits and losses per share under subparagraph 2. However, in applying subparagraph 2, the average value of presumed profits per share calculated by the credit evaluation institution or accounting corporation within the time limit for the return of gift tax base under Article 68 of the Act, and it should not be applied in this case where the non-party company's shares belong to the same year.

3. Conclusion

Therefore, the plaintiffs' claims of this case are dismissed as it is without merit. It is so decided as per Disposition.