A. The meaning of bad debt due to the impossibility of claim recovery included in the necessary expenses

(b) Where payment of a promissory note issued by a third party is refused, whether it falls under the bad debt;

A. In calculating the income amount, the bad debt included in the necessary expenses is limited to the debt that is objectively confirmed in the year when it is impossible to recover in the year when it is included in the necessary expenses. Therefore, even if the debtor discontinued his/her business and escaped, the whole debt cannot constitute the bad debt without confirming whether it is remaining, etc.

B. The obligor’s delivery of a promissory note issued by the third party to the price of goods to the obligee who discontinues his business without leaving any property out of the whole business, and even if the said note is refused subsequent payment, the entire claim for the price of goods cannot be deemed to constitute a bad debt, unless the existence of property of the issuer of the said note is confirmed.

Article 31 of the Income Tax Act, Article 60 (3) 1 of the Enforcement Decree of the Income Tax Act

Plaintiff

Daejeon Head of the tax office

Seoul High Court Decision 85Gu135 delivered on February 18, 1986

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

In calculating the income amount, the bad debt included in the necessary expenses is limited to the claim that is objectively confirmed in the year in which it is impossible to collect, so even if the debtor discontinued his/her business and runs away, the whole amount of the claim cannot be deemed as a bad debt without confirming whether the remaining assets, etc. of the person, even though he/she discontinued his/her business, and even if the debtor delivers a promissory note issued by a third party to the purchase price of goods to the creditor and then ceases his/her business without closing the business, and even if the payment is refused thereafter, the above promissory note cannot be deemed as a bad debt, unless the existence of the assets of the issuer

According to the reasoning of the judgment of the court below, the court below found that the plaintiff's claim of the above non-party 9,240,00 won against the above non-party is a bad debt amount under Article 60 (3) 1 of the Enforcement Decree of the Income Tax Act, and issued a promissory note of KRW 9,240,00 with the payment date as of December 8, 1982. The above non-party was actually discontinued and escaped from October 1982. The above non-party 9,240,00 won was presented as of November 5, 1982 and refused to pay due to the non-party's non-party's non-party's non-party's non-party's non-party's claim of the above non-party 9,240,000 won was non-party's non-party's non-party's non-party's non-party's non-party's non-party's non-party's non-party's non-party's non-party's non-party's debt.

Nevertheless, after recognizing the above facts, the court below found that all of the claim against the above non-party against the non-party against the non-party constitutes a bad debt due to an impossible collection, there is a reason to point out that the court below's error of law, such as misapprehension of legal principles as to bad debt, incomplete hearing, and violation of the rules of evidence, and affected the judgment.

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating judges.

Justices Park Jong-dong (Presiding Justice)