(a) Whether the claim of a corporation, the extinctive prescription of which has already been completed in the preceding business year, is treated as a bad debt and included in the loss during the subsequent business year (negative);

(b) Requirements for bad debt settlement of claims, the extinctive prescription under the Bills of Exchange and Promissory Notes Act

(c) An essential copy, such as "a protocol of impossibility of compulsory execution", etc., in handling bad debts of claims not collectible under subparagraphs 1 and 2 of Article 21 of the Enforcement Decree of the Corporate Tax Act (negative);

A. If the extinctive prescription of promissory note gold claims and advance payment claims owned by a corporation is completed, it is reasonable to view that the corresponding claim has become impossible to collect as a matter of course due to the extinction of law, regardless of whether the debtor's financial perception that the existence of assets, such as the debtor's asset situation and payment ability, etc., is impossible. Therefore, it is reasonable to view that the corresponding claim is legally extinguished, and it shall not be included in the loss of the business year in which the corporation handled the accounts as bad debt thereafter.

B. Article 9(2) of the Enforcement Rule of the Corporate Tax Act provides for the bad debt disposal of claims other than those falling under subparagraphs 1 and 2 of Article 21 of the Enforcement Decree of the same Act pursuant to Article 21(3) of the same Act. If certain claims fall under any of the requirements prescribed in subparagraphs of Article 21 of the Enforcement Decree of the same Act, it is possible to dispose of the relevant claims as bad debt, and it is not necessary to concurrently satisfy the above requirements. Thus, in order to dispose of claims, the extinctive prescription of which has been completed under the Bills of Exchange and Promissory Notes Act, it is sufficient if it falls under Article 9(2)2 of the Enforcement Rule of the same Act, and further, it is not necessary to review whether it falls under Article 21(1)

(c) The bad debt included in deductible expenses pursuant to Article 21 subparagraph 1 or 2 of the Enforcement Decree of the Corporate Tax Act is objectively revealed that it satisfies the requirements for such bad debt, and it does not require that the required documents, such as “written non-performance of compulsory execution” should be prepared as a result of compulsory execution conducted by the court.

(a) Articles 9 and 17(a) of the Corporate Tax Act; (b) Article 21(a) of the Enforcement Decree of the Corporate Tax Act;

A. Supreme Court Decision 87Nu465 delivered on September 27, 1988 (Gong1988, 1352). Supreme Court Decision 78Nu384 delivered on August 28, 1979 (Gong1979, 12196)

Cheong Industrial Co., Ltd., Counsel for the defendant-appellant and one other

head of Sung Dong Tax Office

Seoul High Court Decision 87Gu535 delivered on February 3, 1988

The appeal is dismissed.

The costs of appeal shall be assessed against each appellant.

1. As to the Plaintiff’s ground of appeal

The court below recognized that the period of extinctive prescription of KRW 106,80 on September 30, 1981, which was issued on September 5, 1981 by the defendant, was expired on December 1, 1984, and the extinctive prescription of KRW 6,777,541, which was paid by the plaintiff to the non-party Cheong Heavy Industries Co., Ltd. in advance as a transactional relation, was expired on May 2, 1979. The court below decided that the above non-party Cheong Heavy Industries Co., Ltd. failed to perform its business under the trading agreement was discontinued and missing, and that the above advance payment claim was lawful after the lapse of the period of prescription of Article 163 subparag. 7 of the Civil Act on May 3, 1982, and that it cannot be viewed that the above advance payment claim of KRW 106,80 cannot be objectively finalized on August 18, 198, because it cannot be viewed that the above advance payment claim of KRW 19784, which became final and conclusive on the above bad debt claim of KRW 198484.

2. As to the Defendant’s ground of appeal

According to the reasoning of the judgment below, the court below found that the plaintiff's bad debt 12,850,166 and the non-party 2's total amount of 347,60,766 won were not sold to the non-party 12,80,000 won and the non-party 180,000 won of the above non-party 20,000 won of the above non-party 188,00 won of the non-party 20,000 won of the above non-party 16,00 won of the non-party 18,000 won of the non-party 20,000 won of the non-party 18,000 won of the non-party 16,000 won of the non-party 16,00 won of the non-party 3,00 won of the above non-party 16,00 won of the non-party 18,000 won of the above non-party 16,08.

Article 9 (2) of the Enforcement Rule of the Corporate Tax Act provides that the disposal of bad debts for claims other than those falling under subparagraphs 1 and 2 of Article 21 of the Enforcement Decree of the same Act (see Supreme Court Decision 78Nu384 delivered on August 28, 1979). If a claim falls under any of the requirements provided in each subparagraph of Article 21 of the Enforcement Decree of the same Act, it shall be possible to dispose of the claim as bad debts, or it shall not be met concurrently. Thus, in order to dispose of claims, the extinctive prescription of which has been completed under the Bills of Exchange and Promissory Notes Act, it shall be sufficient if it falls under Article 9 (2) 2 of the Enforcement Rule of the same Act, and further, it shall not be considered again as to whether it is a claim which has not been recovered under subparagraphs 1 and 2 of Article 21 of the same Act, and it shall not be justified in the misapprehension of the legal principle as to the disposal of bad debts under Article 21 subparagraph 1 or 2 of the Enforcement Decree of the same Act.

3. Therefore, all appeals are dismissed, and the costs of appeal are assessed against each losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Jong-soo (Presiding Justice) Lee Chang-soo Kim Jong-won