Whether the market price at the time of mass trading of listed stocks between persons with a special relationship is appropriate;

The disposal of stocks with listed stocks, the largest shareholder, and related parties, including the plaintiffs, whose share ratio exceeds 50%, shall not be erroneous in regarding the average market price for each two months before and after the transaction date as the market price.

Article 101 (Calculation of Capital Gains by Wrongful Acts)

Article 98 (Dispudiation of Wrongful Calculation)

1. All of the plaintiffs' claims are dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 1,091, 634,980 on December 1, 2005 and KRW 743,109,250 on Plaintiff Kim○-ju, and KRW 297,076,630 on Plaintiff Kim○-ju, and KRW 19,637,480 on Plaintiff Kim○-ju, shall be revoked.

1. Details of the disposition;

A. The deceased Kim Jong-dae (Death on February 20, 2001) is a founder of ○○ Group, including ○○ Industrial Co., Ltd. (hereinafter referred to as “○○ Industry”) and ○○ Urban Gas Co., Ltd. (hereinafter referred to as “○○ Urban Gas”), and the plaintiffs, Kim○-man and Kim Il-young (hereinafter referred to as “Plaintiff, etc.”) are children of the deceased.

B. After the deceased's death, the plaintiff et al. sold 161,410 shares of the ○○ Industries to ○○○○○○○ in order to divide the ○○○ Group into the ○○○○ Group's shares. Accordingly, on June 12, 2001, the plaintiff Kim○-ju, Kim○-ju, and Kim○-ju sold the shares of 160,080 shares of the ○○ Industries to ○○ Industry, 86,760 shares, 40 shares, each of ○○○ Industries, which was the final market price of the Korea Stock Exchange, to 27,600 shares, and the plaintiff Kim○-hoon sold 161,410 shares of the ○○○ Industries to ○○○○ on the same day. On June 27, 2001, the plaintiff Kim○-hun sold the shares to ○○○○ on the same day through a mass trading of 160,50 hours or less.

transferor

Transfer Date

A transferee

Category of Stocks

Trading volume

Transfer unit cost (family price)

Calculation Price

○ Kim Ho-hoon

June 12, 2001

○○ Kim

○ Industry

161,410

27,600

34,803

June 27, 2001

○○ Urban Gas

○○ Urban Gas

356,050

16,050

21,115

○ Kim-ju

June 12, 2001

○ Industry

○ Industry

160,080

27,600

34,803

○ Kim-ju

June 12, 2001

○ Industry

○ Industry

86,760

27,600

34,803

○ Kim-ju

June 12, 2001

○ Industry

○ Industry

40,960

27,600

34,803

B. The Plaintiffs reported and paid to the Defendant the transfer value per share of the instant shares at KRW 27,600 for the shares of ○○ Industry, and KRW 16,050 for the shares of ○○ Urban Gas.

C. On December 1, 2005, the Defendant deemed that the tax burden on the pertinent income has been reduced unfairly by means of mass trading with a person with a special relationship on an over-time basis, and thus, constitutes an unfair act stipulated in Article 101 of the Income Tax Act and Articles 98 and 167 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17825, Dec. 30, 2002; hereinafter the same shall apply), and thus, the Defendant issued the latter part of Article 60(1), Article 63(1)1 (a) and (3) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”); the largest shareholder and his/her specially related person on an over-the-counter market of the Plaintiff; the average market price of the Plaintiff 300 percent after adding the Plaintiff’s shares to the 00○○ Industries industry and its shares; the 1301301 percent per day thereafter.

[Ground of recognition] Facts without dispute, Gap 1, 3, 4, 5, 6 evidence, Eul 1 and 2 (including paper numbers), the testimony of Madro, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiffs' assertion

Although the plaintiffs transferred the shares of this case to a person with a special relationship for the purpose of a large-time transaction with the transferee, it is the internal transaction at a certain price within a certain range on the basis of the transaction price formed in the market within the hours of the stock market, and the transfer price of the shares of this case constitutes the "market price under the former Inheritance Tax and Gift Tax Act" because the transfer price of the shares of this case constitutes the closing price on the day formed in the market within the hours of the stock market. Thus, the transaction of the shares of this case cannot be deemed as a transaction which unfairly reduces the tax burden on the place of transaction according to the legitimate market price. Nevertheless, the defendant's disposition of this case, which was deemed as an unfair act on the ground that it is

(b) Related statutes;

Article 101 (Calculation of Capital Gains by Wrongful Acts)

Article 98 (Dispudiation of Wrongful Calculation)

Article 60 (Principles, etc. of Appraisal)

Article 63 (Appraisal of Securities, etc.)

Article 19 (Inheritance Deductions of Financial Property)

Article 49 (Evaluation Principles, etc.)

Article 53 (Appraisal, etc. of Stocks, etc. of Association-registered Corporations)

C. Determination

(1) Article 98(2)1 and Article 167(3), (4) and (5) of the former Enforcement Decree of the Income Tax Act provide that the transfer value shall be calculated based on the market price, and the "market price" shall be calculated based on the market price, and Article 60 through 64 of the former Inheritance Tax and Gift Tax Act and Articles 49 through 59 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17808, Dec. 30, 2002; hereinafter referred to as the "former Enforcement Decree of the Inheritance Tax and Gift Tax Act").

Article 60(1) of the former Inheritance Tax and Gift Tax Act provides that the value of the property shall be the market price as of the base date of appraisal (the date of transfer or acquisition in the case of transfer income tax) and the value appraised by the method of appraisal stipulated in Article 63(1)1 (a) and (b) shall be deemed the market price. Article 60(2) provides that "if the market price is freely traded between many and unspecified persons, the price shall be deemed to be normal if it is freely traded." Article 60(3) provides that the value assessed by the method stipulated in Articles 61 through 65 shall be supplementaryly assessed. Article 63(1)1 (a) of the former Inheritance Tax and Gift Tax Act provides that listed stocks shall be calculated by the average market price for each two months before and after the base date of appraisal, and Article 63(3) provides that if the largest shareholder and the shareholders related to the largest shareholder exceed 50%, the value assessed by Article 63(1)1 of the former Inheritance Tax and Gift Tax Act shall be added to 30%.

(2) We look at the market price of the instant shares in accordance with any standard.

① In full view of the provisions of the former Inheritance Tax and Gift Tax Act on the “market price” as seen earlier, in general, the value generally recognized as normal where a transaction takes place between many and unspecified persons under Article 60(2) of the former Inheritance Tax and Gift Tax Act is recognized as the market price, but with respect to listed stocks such as the instant shares, the latter part of Article 60(1) of the former Inheritance Tax and Gift Tax Act appears to have the nature of the special provision under Article 60(2). Therefore, the latter part of Article 60(1) seems

② Since listed shares are likely to have a large price fluctuation and a large price manipulation according to the circumstances on the trading date, it is easy to occur when determining the market price on the basis of the price (such as closing price) on the day on which the transaction was made. Therefore, in light of such circumstances, the latter part of Article 60(1) of the former Inheritance Tax and Gift Tax Act stipulates that the appraised value (the average market price for two months before and after the trading date) under Article 63(1)1 (a) of the former Inheritance Tax and Gift Tax Act shall be deemed as “market price” and such contents are not unreasonable.

(3) Article 60(3) of the former Inheritance Tax and Gift Tax Act provides that, in cases where it is difficult to calculate the market price, the value assessed according to the methods prescribed in Articles 61 through 65 ought to be complementaryly. Thus, there may be doubts as to whether the value assessed pursuant to Article 63(1)1 (a) is a supplementary assessment method pursuant to Article 60(3). However, as long as there is a legal fiction in the latter part of Article 60(1), it is difficult

Therefore, with respect to the shares of this case where the ratio of shares of the largest shareholder and the related parties, including the plaintiffs, exceeds 50%, the value assessed by applying the provisions of Article 63(1)1(a) and (3) of the Inheritance Tax and Gift Tax Act under the latter part of Article 60(1) of the former Inheritance Tax and Gift Tax Act (for the ○ industry, 34,803 won in case of the ○○ Urban Gas, 21,15 won in which the average amount of the closing price of the Korea Stock Exchange is added to 30% every day before and after the date of sale) shall be regarded as the market price per share. Accordingly, the defendant's disposition of this case under the same premise is legitimate, and the plaintiffs' assertion against this is without merit.

3. Conclusion

Thus, the plaintiffs' claim of this case seeking the revocation of the disposition of this case cannot be accepted, and all of the claims are dismissed.