In calculating the global income tax amount of a real estate dealer, whether Article 58(1) and (2) of the former Income Tax Act (amended by Act No. 3548, Dec. 26, 198) applies to cases where each subparagraph 2 of Article 82(1) and (2) of the same Act is applicable to the calculation of the global income tax amount of a real estate dealer (negative)

Article 82 (1) and (2) of the former Income Tax Act (amended by Presidential Decree No. 26, Dec. 26, 1988) provides that when calculating global income tax of a real estate dealer by the method prescribed in each subparagraph of Article 82 (1) and (2) of the same Act, profit margin such as land shall be separately determined from other global income and the tax amount shall be calculated by a separate method in accordance with a capital gains tax assessment method. Thus, Article 58 (1) and (2) of the same Act concerning the total sum of losses among income carried forward losses on the premise of this provision and Article 113 (3) of the Enforcement Decree of the same Act

Articles 58(1) and (2) and 82(1) and (2) of the former Income Tax Act (Amended by Act No. 4019, Dec. 26, 1988); Article 113(3) of the Enforcement Decree of the same Act

[Plaintiff-Appellant] 119 decided Nov. 12, 1985 (Gong1986, 38)

[Defendant-Appellee] Plaintiff 1 et al.

the director of the tax office

Seoul High Court Decision 90Gu7755 delivered on December 27, 1990

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

The grounds of appeal by the defendant litigant are examined.

According to the reasoning of the lower judgment, the lower court determined that: (a) the Plaintiff incurred losses of KRW 148,201,497 in total in 1985 and 1986; (b) while running real estate sales business and rental business by selling or leasing commercial buildings and offices in the building; (c) the Plaintiff obtained profit margins of KRW 38,742,282 due to the sale and purchase of the above real estate in 1987; (d) but (e) the previous real estate sales business owner paid losses of KRW 34,32,66 in real estate rental business in 1985 and KRW 148,201,497; and (e) the Defendant did not deduct the above losses incurred before the same year from the global income amount of the Plaintiff in 1987; (e) the provisions of Article 288(2) of the Income Tax Act concerning the transfer of the real estate sales business owner’s income tax should be applied to each of the above global income tax base and tax amount of KRW 388,7825.

However, Article 82 of the Income Tax Act provides for the special case in calculating the amount of global income tax for a real estate sales businessman: 1. Where there is no other global income other than the business income from the sale and purchase of land, etc., the larger of the calculated tax amount under Article 70 and the calculated tax amount under Article 92(2) shall be the global income tax amount (paragraph (1)); and where there is any other global income other than the business income from the sale and purchase of land, etc., the calculated tax amount under Article 70 and the calculated tax amount under Article 92(2) shall be calculated separately from the calculated tax amount under Article 92(2) of the Income Tax Act; 2. The special case in relation to the global income tax for such real estate sales businessman shall be deemed to be the global income tax amount under Article 18(2) of the Enforcement Decree of the Income Tax Act; 3. The special case in relation to the global income tax for the sale and purchase of land, etc. under Article 92(2) of the same Act shall be deemed to be the calculated separately from the calculated tax amount of global income tax amount under Article 18(2 of the same Act.

In light of the records, the defendant can be found to have calculated the global income tax amount arising from the real estate trading profit in 1987 by the method as stipulated in Article 82 (1) 2 of the Income Tax Act. In such a case, Article 58 (2) of the Income Tax Act concerning the aggregate of income carried forward losses is not applicable. However, the court below decided that the disposition of this case was unlawful because it erred by the interpretation of each of the above related Acts and subordinate statutes, which affected the conclusion of the judgment. Thus, the ground for appeal pointing this out is justified.

Therefore, the judgment of the court below shall be reversed and remanded, and it is so decided as per Disposition by the assent of all participating Justices.

Justices Song Man-man (Presiding Justice)