The criteria for determining whether the income from the sale of real estate belongs to the business income under the Income Tax Act or is subject to the transfer income tax.

Whether or not the profit from the sale and purchase of real estate belongs to the business income under the Income Tax Act or is subject to the transfer income tax, the purpose of whether or not the sale and purchase is profit-making and whether or not there is continuity and repetition of the degree to be seen as business activities in light of the size, recovery and mode of business, etc. should be determined in light of social norms in consideration of the circumstances, and it is not only one reference material in determining whether the real estate sales and purchase registration is registered as the real

Articles 20(1) and 20(3) of the Income Tax Act, Article 36 of the Enforcement Decree of the Income Tax Act

Supreme Court Decision 81Nu115 Decided September 14, 1982, and 83Nu66 Decided September 11, 1984

[Judgment of the court below]

Head of Mapo Tax Office

Seoul High Court Decision 84Gu1188 delivered on December 20, 1985

All appeals by the plaintiff and the defendant are dismissed.

The costs of appeal shall be assessed against each party.

1. Judgment on the ground of appeal No. 1 by the Plaintiff’s attorney

According to the reasoning of the judgment below, the court below determined that the plaintiff jointly owned the above building on Nov. 10, 1979, which was 860 square meters wide and owned by the non-party 1, the wife, and the non-party 1, the owner of the adjacent land ( Address 2 omitted) 860 square meters and agreed to newly construct one building on the land of the above two parcels and own the center as a boundary, and accordingly, the building was completed on Apr. 10, 1981 by allowing the non-party Samsung General Construction Co., Ltd. to construct the building at the above 10th and above 4th underground, with the construction permission for the above 10th and above 4th underground, and completed the construction construction work at the non-party Samsung General Construction Co., Ltd., Ltd., which was 100 square meters long before the completion of the construction work. However, the court below's determination that the plaintiff's establishment of the real estate rental business was completed at the district tax office after the completion of the construction work.

In addition, the issue of whether the profit from the sale and purchase of a certain real estate belongs to the business income under the Income Tax Act or is merely subject to the transfer income tax shall be determined in light of ordinary social norms in consideration of the circumstances such as whether the sale and purchase of the building is for profit-making purposes and whether there is continuity and repetition of business activities in light of its size, recovery, mode, etc. (see Supreme Court Decision 83Nu66, Sept. 11, 1984). Whether the building is registered as a real estate sales businessman or whether the sale and purchase registration, etc. should be made only one reference material in judging whether the above building is registered as a real estate sales businessman, and even if the plaintiff sells the building in order to pay it with a demand for construction cost, the court below held that the plaintiff and his wife were not erroneous in the misapprehension of legal principles since it is not reasonable in this case.

2. Judgment on the second ground for appeal by the Plaintiff’s attorney

The salary for the employee who did not have been engaged in a business run by himself shall not be included in the necessary expenses because it is not the expenses corresponding to the total amount of the income generated by the business, and such legal principle does not vary by withholding and paying the Class A labor income tax on the corresponding salary. Therefore, it is just to determine that the salary for the non-party 2, who did not have been engaged in the plaintiff's business, is not the amount to be included in the necessary

3. Determination on the grounds of appeal by Defendant Transport Executor

According to the reasoning of the judgment below, the court below found that the plaintiff jointly constructed the building of this case with the non-party company, the non-party company's joint burden of expenses according to the divided ownership ratio, and the non-party company's officers did not work at work, and the residents who purchased or leased part of the building from the non-party company entrusted the management of the building to the plaintiff on January 27, 1982. Thus, the plaintiff collected management expenses from the non-party company's occupant until March 8 of the same year, when the Taeyang Building Management Corporation for the above building management was established from the non-party company's occupant until March 8 of the same year, when the non-party company was established, while managing the whole building of this case, and paid 4,263,65 won with the non-party company's waste collection fees for the non-party company's share and paid 1,920,000 won to the non-party company's non-party company's non-party company's share and the non-party company's share management structure of this case can be justified.

Since the plaintiff omitted the management expenses collected from the residents in the part owned by the non-party company from the plaintiff's revenue amount, the above salary and garbage collection fees paid for the part owned by the non-party company shall not be included in the necessary expenses. However, if there is an omission in the revenue amount as alleged in the arguments, it shall not be denied the necessary expenses for the amount deemed to have been paid in relation to the business on the ground of the omission in the revenue amount, aside from adding the total income amount to the total income amount.

4. Therefore, all appeals by the plaintiff and the defendant are dismissed, and the costs of appeal are assessed against each party. It is so decided as per Disposition by the assent of all participating judges.

Justices Lee B-soo (Presiding Justice)