Seoul Administrative Court 2009Guhap41479 ( October 20, 2010)

National High Court Decision 2007No4661 (Law No. 97.07)

Where a transfer contract is concluded and death, the inherited property subject to evaluation shall be transferred real estate.

(As in the judgment of the first instance), where a transfer contract is concluded and the sale price is not paid, and real estate is not completed as at the starting point of inheritance, and real estate itself is an inherited property, and the claim for the payment of the sale price does not constitute inherited property.

2010Nu38075 Revocation of Disposition of Imposing Inheritance Tax

Republic of Korea, Republic of Korea and 3 others

The director of the tax office.

Seoul Administrative Court Decision 2009Guhap41479 decided October 20, 2010

February 3, 2012

February 24, 2012

1. The plaintiffs' appeal is dismissed.

2. The costs of appeal are assessed against the Plaintiffs.

The decision of the first instance court is revoked. ① On July 5, 2007, the part exceeding KRW 33,792,088 of the disposition of imposition of KRW 252,693,810 of the inheritance tax imposed against Plaintiff Lee Dong-A with respect to Plaintiff Han-B; ② the part exceeding KRW 159,335,235 of the disposition of imposition of KRW 1,191,492,740 of the inheritance tax imposed against Plaintiff Han-B; ③ the part exceeding KRW 249,839,864 of the disposition of imposition of KRW 1,868,27,277 of the inheritance tax imposed against Plaintiff Han-CC; ④ the part exceeding KRW 249,839,68,120 of the disposition of imposition of KRW 1,86,68,120 of the inheritance tax imposed against Plaintiff Han-B, each of which appears to have been revoked (the part exceeding KRW 1,191,492,750,80,8656,864).

1. Details of the disposition;

A. The plaintiff Lee Dong-A is the wife of the deceased Han-E (hereinafter referred to as "the deceased"), who died on May 20, 2005, and the rest of the plaintiffs are the children of the deceased.

B. The plaintiffs, as co-inheritors of the deceased, report 15,304,282,960 won as inheritance tax payable pursuant to Article 67(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7580, Jul. 13, 2005; hereinafter the same shall apply) and Article 64 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 18903, Jun. 30, 2005; hereinafter the same shall apply) on November 16, 2005, and report 15,304,282,960 won as inheritance tax, and KRW 3,826,070,740,7

(B) Voluntary payment of less than 1,478,212,220 won has been approved for annual payment of 11,478,212,220 won.

C. Meanwhile, on July 5, 2007, the Defendant imposed an inheritance tax of KRW 314,413,880 on the Plaintiff A, ② KRW 1,482,513,010 on the Plaintiff B with respect to the Plaintiff AB, ③ KRW 2,324,601,020 on the Plaintiff ACC, ④ KRW 2,321,379,670 on the Plaintiff AD, respectively (including each additional tax; hereinafter referred to as “previous disposition”).

D. Accordingly, on October 14, 2007, the plaintiffs filed a claim for revocation of the previous disposition with the Tax Tribunal, and on July 7, 2009, the Tax Tribunal rendered a decision to revoke only the additional tax on negligent tax returns on the difference in appraisal of the land of this case and the additional tax on negligent tax on the amount reported excessive amount of the spouse's inheritance deduction (However, the court determined that the spouse's inheritance deduction amount was KRW 3 billion). The defendant issued a disposition to correct the amount of tax imposed upon the plaintiffs in accordance with the purport of the above. Accordingly, the amount of tax imposed on the plaintiffs is as follows (hereinafter referred to as the "disposition in this case").

[Reasons for Recognition] Facts without dispute, Gap evidence 1-1, 2, 2-2, 19-1 through 7, Eul evidence 1-2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

1) On May 13, 2005, the deceased entered into a contract to sell the instant land with the purchase price of KRW 3 billion in XX Co., Ltd. (former trade name: hereinafter referred to as “Nonindicted Co., Ltd.”) on May 13, 2005, and on November 21, 2005, the Plaintiff’s inheritance from the deceased was illegal to impose inheritance tax based on the officially assessed land price of the instant land, 10,303,349,98, which is the officially assessed individual land price of the instant land, even though the ownership transfer registration was completed on November 21, 2005.

2) The amount equivalent to the interest rate of 6% per annum from May 1, 2003 to April 27, 2006 (the date on which the plaintiff deposited an O’s obligation) on the deceased’s O as the confirmation obligation of 1,339,880,140 won shall be deducted from the value of inherited property.

3) As of the date of filing an inheritance tax base return, 823,882,450 won ( = 2,163,762,592), the difference between the deceased’s debt amount of 2,163,762,592 won and the debt amount of 1,339,880,142 won actually determined as of the date of filing a lawsuit against the Plaintiffs (=2,163,762,592-1,339,880,142) and HaFF reported an excessive amount of 419,386,301 won of the deceased’s debt amount of 180,356,164 won, the difference between the deceased’s debt amount of 239,030,137 won (=419,386,301-180,356,164 won) and the total amount of 360,580,000 won reported by the Plaintiffs’ 206,381,3000.

4) In cases where an inherited property that is not a real estate that is not a real estate that is divided into a spouse, it is not possible to receive a deduction without explicitly dividing it within the time limit for the division of the spouse’s inherited property under Article 19(2) of the Inheritance Tax and Gift Tax Act. As such, in addition to ① KRW 2.13,839,00,000, which the Defendant recognized a deduction, the amount of KRW 186,712,252,00,000,000,000 paid by the Plaintiffs at the time of filing a return of inheritance tax on November 20, 2005, the amount of KRW 186,712,00,000,000,000 won paid by the Plaintiffs to the Plaintiff at the time of filing a return of inheritance tax on November 20, 200, the amount of cash and deposit KRW 16,873,593,00,000,00.

B. Relevant statutes

Attached Form 1 shall be as listed in attached Table 1.

C. Determination of the plaintiffs' assertion under Article 2. 2. A. 1

(i) the basic facts

A) The Plaintiff Han-B, on behalf of the Deceased, established △△ Development Co., Ltd., and constructed a new building with the fourth and tenth floor above the ground (hereinafter “instant building”) on the instant land. The construction was suspended due to the shortage of funds when only the construction was completed up to the fourth floor above the ground, and the ownership of the instant building, the construction right and the execution right of the instant construction were transferred in sequence to △△ C&C, △△△△, and Y industry.

B) On November 18, 200, KK Construction Industry Co., Ltd. (hereinafter “K Construction Industry”) obtained approval from the deceased for the use of the instant land on July 24, 2001, and completed the framework construction from August 2001 to 10th of the ground by opening the instant construction project from August 24, 2001, while selling it to ordinary consumers with the name “DD Venture Business” and “Wail” attached to the said building, and suspended the construction project for lack of funds around July 2003.

C) After that, K Construction Industry did not resume the instant construction project and was declared bankrupt by the Suwon District Court on May 16, 2005.

D) In this process, the Deceased and the Plaintiff HanB were the de facto operator of the instant land owner or YG development, and as a result, they filed a complaint several times from the buyer of the instant building, and as a result, the Plaintiff Hanwon District Court 2008Gohap393 was sentenced to a suspended sentence of two years and six months in imprisonment due to the violation of the Act on the Punishment, etc. of Specific Economic Crimes (Misappropriation), which was sentenced to a suspended sentence of four years and six months. As to the instant land at the time of the conclusion of the sales contract under the provisions of subparagraph E, the provisional attachment registration for the claim amount of 400 million won in the name of the Y industry-related YG Kim G, the subcontractor, and the provisional attachment business registration for the claim amount of 1.5 billion won in the name of the O

E) Meanwhile, the Plaintiff HanB, representing the Deceased, drafted a sales contract as of May 13, 2005 with respect to the instant land between the Nonparty Company and the Nonparty Company, and the promissory note, the par value of which is KRW 500 million, issued by the Nonparty Company as a down payment, was settled on November 14, 2005, and the ownership transfer registration was completed in the name of the Nonparty Company on November 21, 2005 on the instant land on the ground of a sales contract as of May 13, 2005.

F) After that, the non-party company filed a lawsuit against the trustee in bankruptcy of the KK Construction Industry against Suwon District Court 2006Kahap6933, and the lawsuit at issue was disputed as to whether the instant sales contract was invalid as a conspiracy or anti-social legal act, but the judgment was rendered in favor of the non-party company on March 27, 2007. The above judgment became final and conclusive on April 30, 2008 through the appellate court and the final appeal.

[Reasons for Recognition] Facts without dispute, Gap evidence 3, evidence 4-1, 2, 10 through 16, evidence 18-1 to 11, Eul evidence 2-1 to 3, the purport of the whole pleadings

2) Whether the instant land itself constitutes inherited property or not

A) As to the point at which a sales contract for the instant land was concluded

(1) On May 13, 2005, which was before the death of the deceased, concluded a contract to sell the land of this case with the purchase price of three billion won with the non-party company as of May 13, 2005, as evidence shown in the plaintiff's assertion, there are evidence Nos. 3 (Real Estate Sales Contract), Gap evidence Nos. 5 (Pledge), Gap evidence Nos. 18-1 through 11 (written copy of each register), Gap evidence No. 41 (the facts and reasons), Eul evidence No. 2-1, 2 (written statement, sales contract), etc., but it is difficult to accept as evidence supporting the plaintiff's assertion for the following reasons, and there is no other evidence to prove that the sales contract of the land of this case was concluded before May 20, 2005, the date of death of the deceased.

(A) The Plaintiff submitted a sales contract (No. 3) as to the instant real estate on May 13, 2005, and submitted a promissory note (No. 500 million won) as down payment from the non-party company on May 13, 2005, as stated in the sales contract, on May 13, 2005, (No. 5) and received a promissory note (No. 500 million won endorsement of the non-party company on May 13, 2005, No. 04626012), and the non-party company received a transfer of ownership on the instant land as of May 13, 2005, as of May 13, 2005, it is difficult to view that the transfer of ownership was completed on the instant land as the date stated in the sales contract, No. 12, and the fact that the instant promissory note was issued on May 13, 2005 to the non-party company No. 3250 million won.

(B) The plaintiffs asserted that Gap's certificate No. 5 of May 13, 2005 was received as the sales contract amount for the land of this case until the response to the fact finding of BB Bank's private branch of this court was miswritten, but they received Gap's certificate No. 500 million won before receiving Gap's certificate No. 5, and they returned the above door door bank bill to Kim K before receiving Gap's certificate No. 500, May 13, 2005. However, the plaintiffs did not submit any evidence as to the existence of the above door bank bill, and there is no special circumstance to conclude the sales contract for the land of this case until the non-party company received the down payment from the non-party company as the door bank bill, and there is no doubt that the non-party company's representative of the non-party company was paid the down payment No. 350,500,500,000,000 won as the down payment of the bill of this case No. 531, May 25, 2005.

(C) It cannot be readily concluded that the grounds for registration of each transfer of ownership in the name of the non-party company with respect to the instant land was the transaction on May 13, 2005, and that there was a sales contract on the same date as the actual grounds for registration. However, even according to the statement in the evidence No. 81, it is not proven that the evidence No. 3 and No. 38-1 were not prepared retroactively.

(2) Ultimately, it cannot be recognized that the sales contract for the instant land was concluded before May 20, 2005, the deceased’s death ice, and rather, the sales contract for the instant land is presumed to have been concluded after the deceased’s death.

B) Whether the land of this case is inherited property

Therefore, on May 20, 2005, when the deceased was the time of inheritance, the heir should bear the inheritance tax if the land in this case itself becomes the inherited property. [In case where a contract to transfer the real estate for consideration is concluded by sale and purchase, exchange, etc., and the transferor or transferee is dead and the inheritance commences due to the death of the transferee, there is no separate provision about the scope of inherited property in the Inheritance Tax and Gift Tax Act as to who is the holder of the property under the tax law at the time of the commencement of inheritance. However, as to the transfer or acquisition of the property, which is the basis for calculating the transfer gains tax base of the transfer income tax, there is only a provision that is the date of liquidation of the transferred property in principle (Article 98 of the Income Tax Act and Article 162 (1) of the Enforcement Decree of the same Act) but it is reasonable to interpret that the above provision applies mutatis mutandis to the division of inherited property in the inheritance tax as it is in the inheritance tax. Accordingly, even if the deceased died at all without payment of the purchase price, and even if the plaintiffs received the sale and completed the transfer registration for transfer to the non-party.

3) As to the market price of the instant land, which serves as the basis for the imposition of inheritance tax

Under Article 60(1) of the Inheritance Tax and Gift Tax Act, the inheritance tax shall be levied on the basis of the market price of the land in this case as of the commencement date of inheritance. In light of the following circumstances, which can be recognized by comprehensively considering the facts and the purport of the entire pleadings in each of the statements in Articles 8 and 9 above, it is difficult to view the purchase price of KRW 3 billion under the contract in this case as "market price, i.e., the price recognized as ordinary where a free transaction is made between many and unspecified persons," and therefore, it is lawful for the Defendant to regard KRW 10,303,349,998, which is the officially assessed individual land price of the land in this case at the time of the commencement of inheritance as the value of inherited

A) The sales contract of this case is valid since it does not constitute false conspiracys, etc., and the sales price of 3 billion won under the above sales contract is valid in accordance with the genuine intent between the deceased and the non-party company, and whether the above sales price of 3 billion won can be assessed as the market price as it properly reflects the objective exchange values of the land of this case at the time of commencing the inheritance.

B) B, before entering into the instant sales contract, the Plaintiff 1B on behalf of the Deceased, refused to enter into a sales contract negotiations with KK Construction Industry for selling the instant land at the cost of KRW 6.5 billion on the ground that the purchase price is less than the sales price.

C) As of May 20, 2005, the officially assessed individual land price of the instant land as of May 20, 2005 was KRW 10,303,349,998, and the appraised value of the said land as of June 27, 2007 was KRW 15,639,410,000, and the appraised value of the said land as of August 21, 2009 was KRW 21,134,640,000.

D) The Deceased and the Plaintiff HanB appears to have been at risk of being complained against the bankruptcy creditors of the instant building in the future, as the actual operator of the instant land owner or the instant land owner or the △△ Development. According to the special terms and conditions of the instant sales contract, it appears that the deceased et al. later considered the obligation to be borne by the non-party company against the bankruptcy creditors of the KK Construction Industry as part of the sales price. Thus, it cannot be readily concluded that the sales price under the said sales contract is KRW 3 billion (the more so in light of the fact that the content of the claim registration of provisional attachment registration in the name of KimG, which was completed at the time of the conclusion of the instant sales contract, was not reflected in the said sales contract).

E) Under Article 60(1) and (2) of the Inheritance Tax and Gift Tax Act, the market value is, in principle, based on an objective exchange price formed through a normal transaction, and cannot be said to mean a transaction price which is naturally affected by only one transaction.

4) Sub-determination

Therefore, deeming the land of this case as inherited property and making the disposition of this case at the price of inherited property, 10,303,349,998, which is the officially assessed individual land price of the land of this case at the time of commencing the inheritance, is justifiable. Therefore, the plaintiff's above part

D. Determination as to the plaintiffs' assertions in Articles 2.2. A. 2 and 3

1) Facts of recognition

A) Progress of litigation with OO

(1) As Suwon District Court 20047 and 15549, O filed a lawsuit against the deceased seeking payment of KRW 500 million that O had not received the payment of the construction cost while performing the construction work under a subcontract for construction of a source 1 condominium from the deceased. On the other hand, the Seoul Central District Court 2004Kadan6433 attached the instant land.

(2) On October 4, 2005,O extended the purport of its claim to seek payment of 6% per annum from May 1, 2003 to the date of sentencing, and 20% per annum from the next day to the date of full payment. The Plaintiffs deposited KRW 1.5 billion on April 27, 2006, and rescinded provisional attachment in the name of OO on the instant land.

"(3) The Suwon District Court rendered a judgment on May 16, 2006 that "(3) shall pay 6% interest per annum from June 26, 2003 to May 16, 2006 to the 446,626,714 won, plaintiff Lee Han-B, Han-B, Han-CC, Han-D shall pay 6% interest per annum from June 26, 2003 to May 16, 2006, and 20% interest per annum from the next day to the day of full payment." The above judgment became final and conclusive as it was by the withdrawal of appeal by the plaintiffs on July 4, 2008."

(1) On July 1, 2005, FF filed a lawsuit against the Deceased on July 1, 2005 against the Seoul Central District Court 2005Kahap58125, asserting that it was the owner of the already paid down payment and the claim for payment of KRW 350 million inasmuch as the said lease was cancelled due to the cause attributable to the deceased.

(2) On June 1, 2006, a judicial conciliation was concluded between the Plaintiffs and FF, and the Plaintiffs paid KRW 180,356,164 to FF.

C) The relationship of reporting obligations related to the above lawsuit at the time of the Plaintiff’s inheritance declaration

On November 16, 2005, when filing an inheritance tax return, the Plaintiffs stated the obligation to O as KRW 2,501,865,980, and the obligation to FF as KRW 388,356,164, respectively.

[Ground of recognition] Facts without dispute, Gap evidence 19-1 to 7, Gap evidence 21, 23, Gap evidence 29-32, the purport of whole pleadings

2) Judgment on the plaintiffs' assertion No. 2. A. 2

According to Article 60 of the Inheritance Tax and Gift Tax Act, the value of the property on which the inheritance tax is levied shall be calculated based on the market price as of the commencement date of the inheritance. According to Article 14(4) of the Inheritance Tax and Gift Tax Act and Article 10(1)2 of the Enforcement Decree of the same Act, the obligation to be deducted from the value of the inherited property shall be limited to the obligation of the inheritee, which can be verified by the contract for debt burden, the certificate of creditor, the establishment of security and the payment of interest, etc., and it shall not be limited to the method of proving the obligation under Article 10(1)2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, but it shall be included in the document proving the burden of the obligation, and the final judgment on the obligation between the inheritee and the creditor shall be included in the document verifying the burden of the obligation. Thus, it shall be deducted from the amount of the principal (=46,626,714 won + 297,751, 292x36.25).

Therefore, the plaintiffs' above assertion is justified within the above scope of recognition.

3) Determination as to the plaintiffs' argument No. 2. A. 3

A) For the purpose of facilitating the exercise of taxation rights and the realization of tax claims, additional tax under tax law

Where a taxpayer violates various obligations, such as a return and tax payment, which are prescribed by the Act without justifiable grounds, and where an administrative sanction is imposed as prescribed by the Act, and it is unreasonable to expect the taxpayer to fulfill his/her obligations, and there is any justifiable reason not to mislead the taxpayer into the failure to perform his/her obligations (see Supreme Court Decision 2004Du930, Nov. 25, 2005).

B) In light of the above legal principles, as seen earlier, the amount of the instant case was KRW 2,163,762,592 of the deceased’s debt amount of KRW 1,39,880,142 of the deceased’s debt amount of KRW 2,163,762,592 as of the date of filing the inheritance tax base return and KRW 823,882,450 of the amount of debt amount of KRW 1,382,50 of the deceased’s debt amount of KRW 419,386,301 of the deceased’s debt amount of KRW 180,356,164 as of the date of filing the inheritance tax base return and KRW 239,86,164 of the deceased’s debt amount of the deceased’s debt amount of KRW 239,86,137 of the deceased’s debt amount of KRW 1,380,180,356,164 of the Plaintiff’s debt amount.

(1) As seen earlier, O filed a lawsuit against the deceased seeking payment of KRW 500 million with Suwon District Court 2004Gahap15549, and the provisional attachment of the land of this case was made accordingly. Within the time limit for filing the inheritance tax base return of this case, the purport of the claim was extended to seek the amount of KRW 1,876,837,800, which was before the plaintiffs filed the inheritance tax return, and damages for delay thereof, and the plaintiffs deposited KRW 1.5 billion on April 27, 2006 and removed the provisional attachment of the O's title on the land of this case. Since on November 16, 2005, the inheritance tax return of the plaintiffs filed an inheritance tax return of KRW 1,876,837,80,00 and KRW 500,000,000 which became final and conclusive after the plaintiffs filed the inheritance tax return of KRW 1,876,837,80,000, which became final and conclusive by a judgment.

(2) As seen earlier, on July 1, 2005, FF filed a lawsuit claiming payment of KRW 350 million against the deceased on July 1, 2005, but on June 1, 2006, the judicial conciliation was concluded that the plaintiffs and FF would pay KRW 180,356,164 to FF. However, on November 16, 2005, the inheritance obligation owed by the plaintiffs to FF should be deemed to be equivalent to KRW 350,000,00 and its delay damages. It seems impossible for the plaintiffs to report the amount of inheritance obligation to FF as an inheritance obligation on June 1, 2006, the amount determined at the time of filing inheritance tax return by the plaintiffs and FF, and it is unreasonable to determine the amount of inheritance obligation to the above FF, and even if it did not meet the standard for inheritance tax adjustment, it cannot be said that the amount of inheritance tax is identical with the amount of inheritance tax and its delay damages should be determined within the inheritance tax return period.

(3) Unlike the time when the Plaintiff’s inheritance tax return was filed, it is difficult to expect the Plaintiffs to anticipate the amount of debt to be determined in each civil lawsuit, thereby reporting the inheritance obligation. Even if the amount of debt finally determined is more than the reported amount of debt, the procedures for refund under the Framework Act on National Taxes may not be required to require the Plaintiffs to report the inheritance obligation at an estimated amount below the claimed amount of debt.

E. Determination of the plaintiffs' assertion under Article 2. 2. A. 4

Article 19(1) and (2) of the Inheritance Tax and Gift Tax Act provides that the amount actually inherited by a spouse due to the death of a resident shall be deducted from the taxable amount of inheritance taxes: Provided, That this shall apply only to cases where the inherited property is divided and the spouse’s inherited property is reported by the due date for the division of the spouse’s inherited property. As above, in the division of inherited property, it shall be interpreted that in cases of property requiring registration, registration, and transfer of a title, it shall be registered, registered, and transferred by the due date for the division of the spouse’s inherited property. It is not required to report the division within the due date for the division of inherited property only to the case of property requiring registration, registration, and transfer of a title, as alleged by the

As to the instant case, not the claim for the payment of the purchase price under the sales contract for the instant land, but the claim for the payment of the purchase price should be seen as inherited to the instant land itself.

As seen above, there is no dispute between the parties on the fact that the registration of the split-off of the inherited property under the name of the plaintiff A was made with respect to the land of this case. According to the above facts, since the plaintiffs did not complete the split-off registration on the land of this case, which is inherited property by the time limit for the split-off of the spouse's inherited property pursuant to Article 19 (2) of the Inheritance Tax and Gift Tax Act, the value of the land of this case cannot be deducted from the taxable amount of inheritance taxes. In addition, in the case of other financial assets of the plaintiffs' assertion, it is difficult to recognize that they actually belonged to the plaintiff A, and there is no other evidence to acknowledge that they actually belong to the plaintiff. The money received by the plaintiff A from the plaintiff B, etc. on or after May 20, 2006, which is the time limit for the split-off of spouse's inherited property, the value of the land of this case cannot be deducted from

Therefore, the above part of the plaintiffs' assertion is without merit.

(f) Justifiable tax amount;

If the reasonable amount of tax to be paid by the plaintiffs according to the above determination, is calculated on 12. 12. A.A. 264,618,863 won, B. 1,273,824,277 won, Plaintiff HanCC 2,000,142,162 won, Plaintiff Han D. 1,97,374,182 won, such as the statement in the appropriate amount of tax for each plaintiff. This is obvious that the amount of the disposition in this case is more than the amount of the disposition in this case. Thus, the disposition in this case is justifiable.

3. Conclusion

Therefore, the plaintiffs' claims are dismissed due to the lack of reason, and the judgment of the court of first instance is just, and the plaintiffs' appeal is dismissed. It is so decided as per Disposition.