Cho High-depth2012Gu1009 ( October 15, 2012)

It is that the larger amount between the sum of capital expenditure and transfer expenses and the aggregate of the converted value and the estimated amount of expenses shall be selected as necessary expenses.

In cases where the acquisition value is based on the conversion value, if the sum of the capital expenditure and the transfer cost, which are objectively verifiable necessary expenses, exceeds the conversion value and the estimated deduction amount, the taxpayer can choose it. As such, it is legitimate to deduct the capital expenditure and transfer cost from the necessary expenses for the transferred land whose aggregate of the capital expenditure and transfer cost is larger than the conversion value.

2012Guhap2483 Revocation of Disposition of Imposing capital gains tax

XX

Head of the Daegu Tax Office

August 29, 2012

September 26, 2012

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The defendant's disposition of correction and imposition of capital gains tax of 000 won for the year 201 against the plaintiff on February 3, 2012 shall be revoked.

1. Details of the disposition;

A. On November 1, 1984, the Plaintiff purchased and owned 00-27 27 m2,876 m2 and above ground storage building (hereinafter “instant building”) (hereinafter “instant building”). On May 23, 2011, the Plaintiff sold the following 4 m2 from the above land (hereinafter “each of the instant land”) to KimAA, and sold Y00-27 m292 m292 m2 from among the m200-71 m306 m306 m2 to PB, and sold m200-7306 m206 m2 from the m200-7306 m2 to this m20 m20 m2.

B. On May 23, 2011, the Plaintiff removed the instant building, and completed the registration of ownership transfer for each of the above buyers on May 25, 2011, with respect to the land of XX 000-27, 000-73, and 00-75, and on the land of XX 000-71, the Plaintiff completed the registration of ownership transfer for the aforementioned buyers on May 30, 201.

C. Upon filing a report on capital gains tax following the transfer of this case, the Plaintiff reported and paid KRW 000 as capital gains tax after deducting a total of 000 won from the necessary expenses as shown below. On February 3, 2012, the Defendant, among the amount that the Plaintiff deducted as necessary expenses, deemed 00 won for conversion price at the time of acquiring the instant land, as well as KRW 000,000, and KRW 000,000,000,000,000,000,000,000 won for capital gains tax accrued in 2011 (hereinafter “instant disposition”).

D. The Plaintiff filed an appeal with the Tax Tribunal on February 15, 2012, but was dismissed on May 15, 2012.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 7-5, Eul evidence 1 to 4-2, the purport of the whole pleadings

2. The plaintiff's assertion is as follows.

A. According to Article 97(2) of the Income Tax Act, not only capital expenditure and transfer expenses, but also acquisition value of KRW 000 and estimated deduction amount of KRW 000 shall be deducted as necessary expenses.

B. Since the transfer price of the instant land includes the transfer price of the instant building, 000 won, which is the acquisition price of the instant building, shall also be deducted as necessary expenses.

3. Related statutes;

Attachment 'Related Acts and subordinate statutes' shall be as shown.

4. Judgment on the Plaintiff’s assertion No. 2. A

A. According to Article 97(1) of the Income Tax Act, necessary expenses deductible from the transfer value when calculating gains from transfer are determined by Presidential Decree such as acquisition value, (1) capital expenditure, etc., and (3) transfer expenses. According to Article 97(2)1 of the Income Tax Act, in cases where acquisition value is based on the actual transaction value, the sum of the capital expenditure and transfer expenses shall be added to the actual transaction value, and Article 97(2)2 of the Income Tax Act and Article 97(6)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 23588, Feb. 2, 2012; hereinafter “former Enforcement Decree of the Income Tax Act”), in other cases, if the acquisition value is based on the conversion value, the sum of the estimated capital expenditure and transfer expenses under Article 97(1) of the Income Tax Act shall be added to the estimated necessary expenses. In such cases, if the sum of the estimated expenses and transfer expenses exceeds the estimated expenses and transfer expenses, the sum of the estimated expenses and transfer expenses can not be added to the transfer value.

(b) Fact of recognition;

(1) The Plaintiff continued to use the instant building from November 1, 1984 to the time of its removal.

(2) According to the instant transfer contract, the Plaintiff agreed to remove the instant building before the remainder payment date and deliver the instant land to the buyer (No. 7-1-5). On May 23, 2011, the Plaintiff removed the instant building and received any balance from the buyer on May 25, 2011, and completed the registration of the transfer of ownership of the instant land on June 13, 201.

(3) In the transfer of this case, the sum of capital expenditure and transfer expenses on the instant land is KRW 000 (=capital expenditure + transfer expense + KRW 000). The sum of the conversion value and estimated deduction amount of the instant land is KRW 000 (=the conversion value + KRW 000 + the estimated deduction amount).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 4-1 to 7-5, Eul evidence Nos. 2, 4-1 and 2, the purport of the whole pleadings

C. The plaintiff's assertion is legitimate in that it is reasonable to deduct 000 won, which is the larger of the total sum of capital expenditure and transfer cost of the land of this case, and the total sum of the conversion value of the land of this case and estimated deduction amount, as necessary expenses.

5. Judgment on the Plaintiff’s assertion No. 2. B.

A. According to Article 97 (1) 2 of the Income Tax Act, Article 163 (3) 4 of the former Enforcement Decree of the Income Tax Act, and Article 79 (1) 2 of the Enforcement Rule of the Income Tax Act, the cost of removing disability incurred for the convenience of land use is included in the capital expenditure.

In a case where land and a building on the ground were acquired to be used together with the land and a building on the ground, and only the land is transferred under the condition of the site, the acquisition value, removal cost, etc. of the removed building shall be included in the necessary expenses of the transferred property included in the acquisition value of the land, limited to the case where it is clearly deemed that the acquisition of the land and a building was for the purpose of utilizing only the land by removing the land from the beginning to the building within the time of their acquisition (see Supreme Court Decision 89Nu53, Jan. 25, 199

B. As seen earlier, the Plaintiff’s use of the instant building from November 1, 1984, and removed it on May 23, 201, which was immediately before the transfer of the instant land. Therefore, the Plaintiff’s removal of the instant building within a short time after the acquisition does not constitute only the instant land. Therefore, the Plaintiff’s assertion is without merit, since the acquisition value of the instant building cannot be included in the acquisition value of the instant land.

6. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.