Profit from evaluation of foreign currency assets and liabilities of a real estate rental business operator is included in the total amount of income.

Income tax is calculated by calculating taxable income by taxable period based on the principle of fixed-term taxation, foreign currency liabilities evaluation marginal profits of a person who operates a real estate rental business shall be included in gross income, and evaluation marginal loss shall be included in necessary expenses.

The contents of the decision shall be the same as attached.

Article 4 (Classification of Income)

Article 18 (Real Estate Rental Income)

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 181,009,090 on December 10, 2007 against the Plaintiff on December 10, 2007 is revoked.

1. Details of the disposition;

A. On September 19, 2002, the Plaintiff obtained loans from the real estate rental business operator and the bank of ○○ on September 19, 2002 from Japan for 283,000,000 UN and acquired the land and buildings from ○○-dong, Seoul ○○-dong, 529-4 and 3 other than those above, for business purposes.

(b) Marginal profits from evaluation following the decline of the UN exchange rate;

(1) The 100NN exchange rate: 101.07 won as of December 31, 2004, and 860.04 won as of December 31, 2005

(2) Evaluation marginal profit (205) 430,244,900 won from the amount of foreign currency liabilities in Korean won (2)

(iii)the return and payment of global income tax, not including the evaluation marginal profit in real estate rental income;

C. The Defendant’s corrective disposition (the instant disposition on December 10, 2007; hereinafter the same)

Additional correction and notification of KRW 181,009,090,000,000,000,000,000,000 for foreign currency liabilities, on the ground that it should be included in the gross income of real estate rental income;

D. Procedure of the preceding trial: The Tax Tribunal’s dismissal of the Plaintiff’s appeal on August 26, 2008

[Reasons for Recognition] Unsatisfy, Gap evidence 1-1, 2, 3, 4, and Eul evidence 1-1;

The purport of all pleadings

2. Whether the instant disposition is lawful

A. The Plaintiff’s assertion (this case’s disposition-based statute is unconstitutional and invalid);

(1) Article 39(4) of the Income Tax Act (hereinafter “Act of this case”)

Since it is delegated to the Enforcement Decree without specifying the scope of the total amount of revenue to the year to which it belongs, it violates the principle of prohibition of comprehensive delegation and no taxation

(2) Article 97 (1) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618 of Feb. 22, 2008) (hereinafter the Enforcement Decree of this case) (hereinafter the same shall apply)

It is against the principle of substantial taxation, the principle of guarantee of property rights, and the principle of equality.

(b) Related statutes;

Article 4 (Classification of Income)

Article 18 (Real Estate Rental Income)

C. Determination

(1) Whether the legal provisions of the instant case are unconstitutional or invalid

The legal provision of this case delegates matters necessary for the total amount of income, i.e., the scope of amount received or received in the pertinent year, and the period of calculation or confirmation thereof, necessary matters for the calculation of necessary expenses corresponding to the total amount of income, and necessary matters concerning the year to which the total amount of income and necessary expenses are attributed, i.e., the year to which the date when the total amount of income and necessary expenses are determined, to the Presidential Decree. In particular

This delegation aims to properly cope with changes in the reality of economy.The Income Tax Act regulates items and rates of taxation in Articles 4, 18, and 55, but only delegates only the scope of total revenue and the evaluation methods of assets for calculation, which did not expand taxable objects or prescribe new taxation requirements.

Therefore, the legal provision of this case cannot be deemed to have violated the principle of prohibition of comprehensive delegation or the principle of no taxation without law.

(2) Whether the enforcement decree provision of this case is unconstitutional or invalid

Whether to limit the scope of capital gains which are subject to taxation or include unrealizedable gains in income is a matter of legislative policy to determine the scope of income (see Supreme Court Decision 92Nu18122, Nov. 10, 1995). Thus, solely on the basis that the above provision is included in gross income, it cannot be deemed that it goes beyond the delegation scope of the Income Tax Act or violates the substance over form principle solely on the basis that it is included in gross income (see Supreme Court Decision 92Nu18122, Nov. 10, 1995).

In addition, in light of the fact that income tax is calculated on the basis of the taxable period artificially determined by the principle of fixed-term taxation, it is necessary to revert all the total revenue and necessary expenses to a resident in a specific taxable period according to a certain principle or standard, and that in the case of foreign currency assets and liabilities in the pertinent year, if any loss from loss is incurred in the pertinent year, it shall be included in the necessary expenses for the pertinent year in accordance with the principle of corresponding to income and expenses, it shall not be deemed that the above provision excessively infringes on property rights or infringes on the right to equality

(3) Any other determination as to a claim

The Plaintiff asserts that the evaluation marginal profit of this case is a taxation on unrealized profits, and thus does not become subject to taxation under the Income Tax Act. However, as seen earlier, the evaluation marginal profit of this case is obviously included in the total income of real estate leased income pursuant to Article 18(2) of the Income Tax Act and Article 18(2) of the Enforcement Decree of the instant case, so the said assertion is not reasonable.

3. Conclusion

The plaintiff's claim is dismissed because there is no ground for appeal.