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.

Where a transfer contract is concluded and a death is not paid, since the transfer of real estate is not completed at the commencement of inheritance, the real estate itself is an inherited property and the claim for payment of purchase price does not constitute inherited property.

1. Each of the plaintiffs' claims is dismissed.

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

On July 5, 2007, ① the part exceeding KRW 33,792,08 of the disposition of imposition of KRW 252,693,810 of the inheritance tax imposed by the Defendant against Plaintiff LA, 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 LAB, ③ the part exceeding KRW 249,839,864 of the disposition of imposition of KRW 1,865,68,120 of the inheritance tax imposed against Plaintiff LA, ③ the part exceeding KRW 249,839,864 of the disposition of imposition of KRW 1,865,68,120 of the inheritance tax imposed against Plaintiff LA, and ④ the part exceeding KRW 249,493,63,00 of the disposition of imposition of KRW 1,191,492,750 of the inheritance tax imposed against Plaintiff LA.

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, filed an inheritance tax return on November 16, 2005 pursuant to Article 67(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7580, Jul. 13, 2005; hereinafter referred to as the "Inheritance Tax and Gift Tax Act") 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). The plaintiffs voluntarily paid inheritance tax amounting to KRW 3,826,070,740 (less than KRW 11,478,212,220 (less than KRW 00), and obtained approval for annual payment.

C. On the other hand, on July 5, 2007, the Defendant imposed each inheritance tax of KRW 2,324,601,02,00 on the Plaintiff A, KRW 313,880 on the following grounds: ① 1,482,513,010 on Plaintiff B; ③ 2,324,601,020 on Plaintiff ACC; ④ 2,321,379,670 on Plaintiff AD (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").

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

2. Whether the instant disposition is lawful

A. Summary of the plaintiffs' claims

1) On May 13, 2005, the deceased, on May 13, 2005, sold the instant land to F&C Co., F&C (the trade name before the change: F&F Co., Ltd.; hereinafter referred to as “non-party company”) at KRW 3 billion, and on November 21, 2005, registered the transfer of ownership under the name of the non-party company on November 21, 2005, the deceased’s inheritance is illegal to impose inheritance tax on the basis of KRW 10,303,349,998, which is the officially assessed individual land price of the instant land, even though the inheritance amount

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 the obligation to GG Construction) against the deceased’s confirmation obligation of KRW 1,339,880,140, shall be deducted from the value of inherited property.

3) The Plaintiffs could not have predicted that the judicial conciliation would be concluded between GG Construction at the time of filing an inheritance tax return and HaH. As such, the Plaintiffs could not have predicted that the judicial conciliation would be concluded between Hah and Hah. As such, the Plaintiffs’ total amount of KRW 2,890,222,144 (=2,501,865,980 + + 388,356,164) reported by the Plaintiffs as the amount of debt owed to GG Construction and Hah H was the aggregate of KRW 2,583,148,893,251 (=2,890,222,144 – KRW 2,583,148,893) was deducted from the total amount of claims claimed by GG Construction and the amount of claims claimed by Hah. Accordingly, the additional tax on negligent tax on this part is unlawful.

4) The deceased’s GG construction and HaH’s debt incurred in relation to the construction or lease of the source condominiums and source K K K K K K Ha’s debt already reported by the plaintiffs as inherited property. As such, the Defendant may not impose additional tax on the remaining amount of KRW 1,062,92,912,587 [2,587 [2,890,222,144 - Defendant’s reported amount of KRW 1,520,236,306 (=1,339,80,142 + KRW 180,356,164) + KRW 307,073,251] under Article 78(1)2 of the Inheritance Tax and Gift Tax Act or Article 48(1) of the Framework Act on National Taxes.

(b) Related statutes;

Attached Form 1 is as shown in the relevant statutes.

C. As to the plaintiffs' assertion as to the above A-1

1) Facts of recognition

가) 망언을 대리하여 건축허가를 받은 원고 한BB은 주식회사 LL개발을 설립하여 이 사건 토지 지상에 지하 4층, 지상 10층 규모의 건물(이하, '이 사건 건물'이라고 한다) 신축 공사(이하, '이 사건 공사'라고 한다)를 하였는데, 지상 4층까지의 골조공사만 마친 상태에서 자금 부족으로 공사가 중단되었고, 그 후 이 사건 건물에 관한 소유권, 이 사건 공사에 관한 시공권 및 시행권은 주식회사 MMM씨티, 주식회사 코리안 NNN, 주식회사 QQ산업으로 각 순차 이전되었다.

나) 주식회사 PPP건설산업(이하, 'PPP건설산업'이라고 한다)은 2000. 11. 18. 망인으로부터 이 사건 토지에 관한 사용승낙을 받은 다음 2001. 7. 24. 주식회사 QQ산업으로부터 위 건물의 소유권 등을 양도받아 2001. 8.경부터 이 사건 공사를 속개하여 지상 10층까지의 골조공사를 완료하는 한편, 위 건물에 'RRR벤처타운', 'ZZ 상가타운'이라는 명칭을 붙여 일반 수요자들을 대상으로 분양을 하다가 2003. 7.경 자금부족으로 공사를 중단하였다.

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

라) 이와 같은 과정에서 망인과 원고 한BB은 이 사건 토지 소유자 내지 주식회사 통호개발의 실질적인 운영자로서 이 사건 건물의 수분양자들로부터 수차에 걸쳐 고소를 당하였고, 그 결과 원고 한BB은 수원지방법원 2008고합393호 특정경제범죄가중처벌 등에 관한 법률위반(배임) 등으로 징역 2년 6월에 집행유예 4년을 선고받기도 하였으며, 아래 마)항의 매매계약 체결 당시 이 사건 토지에 관하여 주식회사 QQ산업 관계자인 김TT 명의의 청구금액 4억 원인 가압류기업등기, 하도급업체인 GG건설 명의의 청구금액 15억 원인 가압류기업등기가 각 경료되어 있는 상태였다.

E) On the other hand, on May 13, 2005, Plaintiff B, on behalf of the deceased, entered into a sales contract on the instant land with the Nonparty Company as follows (hereinafter “instant sales contract”). On the same day, the promissory note was issued at the face value of SSAC issuance (the said promissory note was settled on November 14, 2005), and on November 21, 2005, the ownership transfer registration of the said land was made in the name of the Nonparty Company on the ground of the instant sales contract.

F) After that, the non-party company filed a lawsuit against Suwon District Court 2006Gahap6933 against the advice of the PP Construction Industry's bankruptcy, and the lawsuit was disputed as to whether the sales contract of this case was null and void as a conspiracy, false representation or anti-social legal act, but the judgment in favor of the non-party company was rendered on March 27, 2007, and 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 through 11, Eul evidence 2-1 through 3, the purport of whole pleadings

2) Determination

A) In the event that a contract for a commercial transfer of real estate is concluded through the sale and purchase or exchange of real estate, and the inheritance commences due to the death of the transferor or transferee at the time of commencement of inheritance, there is no separate provision on the scope of inherited property in the Inheritance Tax and Gift Tax Act as to who is the owner of the relevant property under the tax law at the time of commencement of inheritance. However, there is only a provision on the transfer or acquisition of assets, which is the basis for calculating transfer margin in the taxation tableGG under the Income Tax Act, as a matter of principle, that it is the date of liquidation of transferred assets (Article 98 of the Income Tax Act and Article 162(1) of the Enforcement Decree of the same Act). However, the above provision should be interpreted as applicable mutatis mutandis not only to the taxation requirement of the transfer income

Therefore, in case where a seller dies while the purchase price is not paid in full, and an inheritor has received the purchase price and completed the registration of ownership transfer to a buyer, the real estate itself is inherited and its heir should bear inheritance tax as well as the claim for the payment of the purchase price is not inherited property, since the transfer of real estate is not completed at the time of the commencement of inheritance.

B) Therefore, in light of the following facts and circumstances, the inheritance tax shall be imposed on the basis of the market price of the land of this case as of the date of commencing the inheritance under Article 60(1) of the Inheritance Tax and Gift Tax Act, and in view of the facts recognized above and the evidence Nos. 8 and 9, which can be recognized by comprehensively taking into account the overall purport of the pleadings, it is difficult to view the sales price of KRW 3 billion under the sales contract of this case as the price that is recognized to have been ordinarily established in the event of free transactions between many and unspecified persons, i.e., the price that is recognized to have been freely traded, and therefore, it is lawful for the Defendant to regard KRW 10,303,349,98, which is the officially assessed individual land price of this case

(1) The sales contract of this case is valid because it does not constitute false conspiracy, 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 value of the land of this case at the time of commencing the inheritance.

(2) The Plaintiff-B, on behalf of the Deceased, refused to negotiate a sales contract with the PP Construction Industry for selling the instant land at the cost of KRW 6.5 billion prior to the conclusion of the instant sales contract on the ground that the sales price was less than the sales price.

(3) 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.

(4) The deceased and the Plaintiff HanB appears to have been at risk of being avoided from the buyers of the instant building or the bankruptcy creditors of the PP construction industry in the future as the actual operator of the instant land owner or LL development. According to the special terms and conditions of the instant sales contract, it appears that the deceased et al. were considered as part of the sales price that the non-party company bears obligations to be borne by the bankruptcy creditors of the PPP construction industry in the future. Thus, it cannot be concluded that the sales price under the said sales contract is KRW 3 billion (the same shall apply in light of the fact that the claim amount under the name of KimT, which was completed at the time of the conclusion of the instant sales contract, was not reflected in the said sales contract).

(5) 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 inevitably depends on only one transaction.

C) Therefore, the plaintiffs' above assertion is without merit.

D. As to the plaintiffs' assertion as to the above A-2

1) Facts of recognition

A) GG Construction filed a lawsuit against the Deceased for the payment of KRW 500 million (2004Kadan6433, Seoul Central District Court 2004Kadan643, which was the Seoul Central District Court 2004) and 15549, that GG Construction was subcontracted for construction of the 1st source condominium from the Deceased and was not paid the construction cost.

B) On October 4, 2005, GG construction sought payment of KRW 6% per annum from May 1, 2003 to the date of sentencing, and from May 1, 2003 to the date of full payment, KRW 20% per annum. The Plaintiffs deposited KRW 1.5 billion on April 27, 2006, and rescinded provisional attachment in the name of GG construction on the instant land.

C) On May 16, 2006, Suwon District Court sentenced 'G Construction', 'A' to 446,626,714, 'A' to 'A' to 'A' to 'B', 'Korea-B', DaD' to 'B', 'D' to 297,751, 142 won, and each of the above amounts to 6% per annum from June 26, 2003 to May 16, 2006, and 20% per annum from the next day to the day of full payment' to 'A'. The above judgment became final and conclusive by withdrawing appeal on July 4, 2008 by the plaintiffs.

[Ground for Recognition: Facts without dispute, Gap evidence 21, evidence 23, evidence 29, purport of whole pleadings]

2) Determination

살피건대, 상속세및증여세법 제60조에 의하면, 상속세가 부과되는 재산의 가액은 상속개시일 현재의 시가에 의하여야 하고, 상속세및증여세법 제14조 제4항, 같은 법 시행령 제10조 제1항 제2호에 의하면, 상속재산의 가액에서 차감될 채무는 상속개시 당시 피상속인의 채무로서 상속인이 실제로 부담하는 사실이 채무부담계약서, 채권자확인서, 담보설정 및 이자지급에 관한 증빙 등에 의하여 확인될 수 있는 것에 한한다고 할 것인바, 상속세및증여세법 시행령 제10조 제1항 제2호 소정에 채무의 입증방법은 한정적인 것이 아니라 채무 부담 사실을 입증할 수 있는 서류를 예시적으로 열거한 것이라고 할 것이고, 피상속인과 채권자 사이의 채권채무관계에 괜한 확정 판결문은 당연히 그 채무 부담 사실을 확인할 수 있는 서류에 포함된다고 할 것이므로, GG건설에 대한 확정채무 원금 1,339,880,140원(=446.626,714원 + 297,751,142원 x 3)에 대한 2003. 6. 26.부터 상속개시일인 2005. 5. 20.까지의 이자 역사 상속재산가액에서 공제되어야 할 것이다.

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

E. As to the plaintiffs' allegation in paragraphs (a) and (4)

1) Facts of recognition

A) On July 1, 2005, HaH concluded a lease agreement with the Deceased as Seoul Central District Court 2005Gahap58125 on the Suwon-dong 60% of the Suwon-dong Hamdong Hamdong, Suwon, and filed a lawsuit claiming payment of KRW 350 million, asserting that the said lease agreement was cancelled due to the deceased’s cause attributable to the cause attributable to the deceased, Hah had the right to receive the down payment and the damages.

B) On June 1, 2006, a judicial conciliation was concluded between the Plaintiffs and HaH on June 1, 2006, the Plaintiffs paid KRW 180,356,164 to HaH.

C) However, in filing an inheritance tax return on November 16, 2005, the Plaintiffs stated the obligation to GG construction in KRW 2,501,865,980, and the obligation to HH in KRW 388,356,164, respectively.

[Ground for Recognition: Facts without dispute, entry of Gap evidence No. 19-1 through 7, and evidence No. 30 through 32, and purport of whole pleadings]

2) Determination

A) The portion of additional tax for failure to report on 307,073,2511 won

On November 16, 2005, when the plaintiffs submitted inheritance tax return to the defendant on November 16, 2005, the facts that the plaintiffs already received the application for expansion of claim of GG Construction on October 4, 2005 and the complaint of HH on July 1, 2005 are as seen above. Accordingly, according to the above facts of recognition, it cannot be deemed that there is a justifiable reason that the above application for expansion of claim and the complaint are more than the sum of the sum stated in the application for expansion of claim of this case and the complaint as the obligation to be deducted from inherited property.

B) The portion of additional tax for failure to report 1,062,912,587 Won2)

In light of the principle of no taxation without the law, the interpretation of tax laws and regulations shall be interpreted as the law, barring any special circumstances, and it shall not be permitted to expand or analogically interpret the tax laws and regulations with the benefit of taxpayers without any reasonable reason. In particular, it is also consistent with the principle of fair taxation to strictly interpret the provisions that clearly see the requirements for tax reduction and exemption as the preferential provisions (see, e.g., Supreme Court Decisions 2003Du7392, May 28, 2004; 2005Da19163, May 25, 2006).

According to the Ministry of Health and Welfare, Article 67 of the Inheritance Tax and Gift Tax Act, and Article 64 of the Enforcement Decree of the same Act with respect to the instant case, the heir must make a separate report on the tax base of the inheritance tax by separating the gap between the total property of inheritance and the total property of debts, public charges, and funeral expenses. Thus, it cannot be deemed that quasi-construction and HaH’s obligations with respect to HahH are related to the original source condominium which was reported as inherited property, and the return may not be made separately. Moreover, Article 78(1)2 of the Inheritance Tax and Gift Tax Act refers to the case where the inheritance or donated property is not confirmed on the ground of the lawsuit on the ownership, etc. of the reported property under the law, unless there is a lawsuit on the ownership, etc. of the original source condominium, etc., and there is no room to apply the above provision, and it is difficult to deem that there

C) Sub-decision

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

(f) Justifiable tax amount;

1) If the reasonable amount of tax to be paid by the plaintiffs as above is calculated on December 12, the details of the tax amount calculated as shown in the Plaintiff’s due tax amount column, as shown in the Plaintiff’s due tax amount column, the Plaintiff’s 267,106,475 won, the Plaintiff’s 1,285,79,165 won, and the Plaintiff’s 2,018,94,973 won, the Plaintiff’s 1,285,79,165 won, and the Plaintiff’s 2,018,94,973 won, and the Plaintiff’s DaD 2,016,1

2) As to this, the Plaintiffs asserted that, in cases where the inherited property that is divided into the spouse’s financial property is not a real estate, it should be clearly divided within the spouse’s division period under Article 19(2) of the Inheritance Tax and Gift Tax Act, and that, in addition to the amount of KRW 2.13,839,00,000, the Defendant recognized the deduction, the Defendant should not be entitled to deduction. In addition, ① KRW 1 billion,000,000,000, and ② KRW 17,720,617, financial property, such as the case’s stocks, etc., and ③ KRW 60,619,606, and KRW 494,491,438, and KRW 300,00,000,000,000,000,000,000,000,000 won, which were received by the Plaintiff B, etc. on September 18, 2006.

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 such deduction applies only to the case where an inherited property is divided and the spouse’s inherited property is reported by the due date for the division of inherited property. As above, in the division of inherited property, it shall be interpreted that in the case of a property requiring registration, registration, transfer of title by the due date for the division of inherited property, the registration, transfer of title should be made by the due date for the division of inherited property. It is not required to report the division within the due date for the division of inherited property only in the case of a property requiring registration, registration, transfer of title

As seen earlier, the fact that the plaintiffs' claim for the payment of the purchase price under the sales contract of this case is not a claim for the payment of the purchase price under the sales contract of this case, but the land of this case itself should be deemed inherited. The fact that there was no dispute between the parties that the registration for the division of inherited property under the name of plaintiff Eul was made with respect to the land of this case. According to the above facts of recognition, since the plaintiffs did not make the registration for division of the land of this case, which is inherited property by the spouse division deadline 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 the case of financial assets of the plaintiffs' claim amounting to KRW 17,720,617, the statement of the evidence No. 19-6 of the plaintiff's claim that financial assets belong to the plaintiff Lee, and there is no other evidence to acknowledge that the transfer of ownership belongs to the plaintiff Lee, etc., and since it was divided after May 20, 2006.

Therefore, the plaintiffs' above assertion is without merit.

3. Conclusion

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