Appellate Court Decision 2014 Deputy 1838 (No. 28, 2014)

The donee bears the burden of proving the fact that the donee has assumed the obligation of collateral security and has discharged the obligation by his own act.

"Generally, in the case of a donation to a third party of a real estate on which the right to collateral security has been created by a lineal ascendant, the right to collateral security shall be exempted from the debt, and it shall not be deemed that the donee takes over or bears the obligation to be deducted from the value of the donated property, and the donee bears the burden of proving the burden of proof for this."

Articles 44, 47, and 65 of the Inheritance Tax and Gift Tax Act

Jeju District Court-2014-Gu Partnership-216

AA

BB Director of the Tax Office

2015.04.08

205.20

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s disposition of imposing gift tax of KRW 00,00,000,000, which was imposed on the Plaintiff on February 10, 2014, shall be revoked.

1. Details of the disposition;

A. On October 19, 2004, CCC completed the registration of ownership transfer on the ground of sale by voluntary auction on October 4, 2004 with respect to the land of this case (hereinafter “instant land”). CCC established the right to collateral security (HH and maximum debt amount of KRW 130 million), the obligor CCC established the right to collateral security (HH, maximum debt amount of KRW 60 million) on April 12, 2006, and the obligor CCC additionally established the right to collateral security (hereinafter “mortgage”) on October 19, 2004.

B. Meanwhile, at the time of the above voluntary auction, the CCC borrowed KRW 20 million from the FF, the father of the Plaintiff. On October 22, 2007, the CCC decided to sell and purchase the instant land to FF for KRW 170 million, and decided to substitute the loan claim of KRW 150 million for the FF’s loan claim of KRW 20 million with the FF, in a way of offsetting the FF’s remainder payment claim of KRW 20 million with the CCC.

C. Accordingly, on October 22, 2007, FF acquired each of the above collateral security and collateral obligations, completed each of the registration of change of the right to collateral security (hereinafter referred to as the "each of the instant right to collateral security") with FF as the debtor on the 26th of the same month, and completed the registration of transfer of ownership on the instant land on November 6, 2007.

D. After that, on November 13, 2009, the Plaintiff completed the registration of ownership transfer based on the sale on November 5, 2009 with respect to the instant land, and on November 13, 2009, the registration of FF’s right to claim for the transfer registration was cancelled on November 13, 2009.

E. The Defendant assessed the value of donated property at KRW 170 million, which was the purchase price of the instant land, and imposed KRW 00,000,000 on the Plaintiff on February 10, 2014 (hereinafter “instant disposition”) on the ground that the Plaintiff did not report the fact of the donation, on the ground that the Plaintiff was in fact donated the instant land from FF and did not report the fact of donation (hereinafter “instant disposition”).

F. The Plaintiff appealed and filed an appeal with the Tax Tribunal on March 27, 2014, but the said appeal was dismissed on July 28, 2014.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, Eul evidence Nos. 1 through 4, purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the Plaintiff decided to take over the secured debt of each of the instant collateral security interests and donated the instant land from FF to F, the Plaintiff was donated the instant land from FF with the actual purchase price of KRW 170 million, deducting the secured debt amount of KRW 150 million from the secured debt amount of KRW 150 million. Therefore, even if the Plaintiff constitutes a gift with the burden, it is unlawful for the Defendant to calculate the taxable value of donated property without deducting the debt amount acquired by the Plaintiff based on the purchase price of the instant land, without considering the aforementioned circumstances.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Article 47(3) of the Inheritance Tax and Gift Tax Act provides that even if the donee takes over the obligation of the donor with respect to the donation between lineal ascendants and descendants, the amount of the obligation shall be presumed not to have been taken over by the donee. However, only if it is objectively deemed that the donee takes over the obligation because the amount of the obligation falls under each subparagraph of Articles 36(2) and 10(1) of the Enforcement Decree of the same Act, it cannot be deemed that the amount of the gift tax should be calculated by subtracting the amount of the obligation from the value of the gift. Generally, if the real estate established in the third party’s future is donated from the lineal ascendant, it cannot be deemed that the donee takes over the obligation of the collateral and the obligation to be borne by the donee deducted from the value of the gift property. In such a case, the Plaintiff cannot be deemed to have taken over the obligation of the donee with the burden of proving that the donee took over the said land by his own possession of the property by his own possession of the fixed collateral, or that it was difficult for the Plaintiff to prove the acquisition of each of the land in question.

3) Therefore, the Defendant’s calculation of the taxable value of donated property without deducting the secured debt amount of each of the instant mortgages from the donated property while rendering the instant disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.