Examination Transfer 2013-0128 ( October 11, 2013)

Tax disposition based on the transfer value confirmed as actual transaction price is legitimate.

Transfer income tax on short-term transfer shall be calculated on the basis of the actual transaction price, and a disposition of imposition based on the actual transaction price confirmed is legitimate.

Article 96 (1) 4 of the former Income Tax Act (amended by Act No. 6781 of December 18, 2002; hereinafter the same shall apply) and Article 96 (1) 4 of the transfer value.

2013Guhap21098 Action Demanding revocation of Capital Gains Tax Imposition

AA

O Head of tax office

June 24, 2014

July 18, 2014

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax and penalty tax of KRW 0000 for the year 2002 against the Plaintiff on May 1, 2013 shall be revoked.

1. Details of the disposition;

A. On March 15, 2002, the Plaintiff acquired 1706.73 square meters and above-ground buildings 888-7 square meters and 1788-10 square meters and 584 square meters and above-ground buildings (hereinafter “the instant real estate”). The Plaintiff transferred to BB all of the instant real estate and the instant business facilities and fixtures to BB, and completed the registration of ownership transfer on December 12, 2002, and completed the registration of ownership transfer on December 31, 200, with the transfer value of KRW 000 and the acquisition value of KRW 0000,000.

B. On June 29, 2012, BB filed a report on the acquisition value of the instant real property at KRW 00,000,000, while transferring the instant real property. The FF Director confirmed that BB acquired the instant real property from the Plaintiff after on-site verification, and notified the Defendant of the fact-finding data.

C. On May 1, 2013, the Defendant decided and notified the Plaintiff on May 1, 2013 that the transfer value of the instant real estate was KRW 000,000,000 for the transfer income tax reverted to the year 2002 (including penalty tax of KRW 000,000 for failure to report, and penalty tax of KRW 000 for failure to report).

D. On July 1, 2013, the Plaintiff filed a request for review disputing the above disposition with the Commissioner of the National Tax Service. On October 11, 2013, the Commissioner of the National Tax Service decided that “The above disposition of imposition shall be determined by deducting the cost of transfer of the instant real estate from the cost of transfer of KRW 0000,000, and then corrected the tax base and amount of transfer income tax after correcting the tax base and amount of transfer income tax.”

E. According to the purport of the above decision on October 22, 2013, the Defendant determined the Plaintiff’s transfer value of the instant real estate as KRW 000,000 (=00000 - 000000). The Plaintiff’s transfer income tax for the year 2002 was reduced or corrected as KRW 000 (including additional tax for the failure to file a report, KRW 0000,000, and additional tax for the failure to file a report) (hereinafter “the instant disposition”).

Facts that there is no dispute over recognition, Gap evidence 1 through 4, Gap evidence 5-1, 2, 3, Eul evidence 1, Eul evidence 2-1, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

On November 16, 2002, the Plaintiff entered into a sales contract that transfers all of the instant real estate and facilities to BB at KRW 000,000,000. On November 15, 2002, the Plaintiff received a cashier’s check from BB on November 15, 2002, and returned KRW 000,000 after receiving bank loans from BB on December 12, 2002.

Therefore, the Plaintiff’s transfer value of the instant real estate was KRW 0000,000, and the Defendant considered it as KRW 000,000 and rendered the instant disposition, so the instant disposition should be revoked as unlawful.

B. Determination

1) Article 96(1)4 of the former Income Tax Act (amended by Act No. 6781, Dec. 18, 2002; hereinafter the same) provides that “The transfer value of the pertinent asset is based on the standard market price at the time of the transfer of the relevant asset, but in the case of the real estate within one year after its acquisition, it shall be based on the actual transaction price.” Since the fact that the Plaintiff transferred the instant real estate to BB within one year after its acquisition is as seen earlier, it shall be calculated based on the actual transaction price of the instant real estate when calculating the transfer income tax on the instant real estate.

2) In light of the following circumstances, it is reasonable to view the actual transaction value of the instant real estate as KRW 000,000, in view of the evidence Nos. 4, 5-1, 2, 3, and 2-1 through 8-8 of the evidence Nos. 5, and the witness CCC’s testimony as a whole.

① The buyer BB stated that the purchase price is KRW 000,000, which is the date of the contract, paid to the Plaintiff the down payment of KRW 000,000 on November 16, 2002, which is the date of the contract. On December 12, 2002, DB deposited KRW 000,000, which was given a loan of the instant real estate from DB to the Plaintiff’s DB bank account as security, and on the same day, withdrawn KRW 00,000 from its EE bank account and paid KRW 00,000 among them as remainder of the purchase price. According to each of the above evidence, it is confirmed that the Plaintiff voluntarily received KRW 00,000 from BB on November 15, 201, which is the day before the sale contract was concluded, and in light of the fact that the Plaintiff’s deposit of KRW 00,000,000 from BB on the date of the contract, the Plaintiff’s deposit of KRW 200,2000,200,2000.

② The CCC, which arranged the sale and purchase of the instant real estate, was paid KRW 000,000 in return for the preparation of a transportation contract on the instant real estate in this Court. At the time of the sales contract, the CCC directly prepared a third chapter of the sales contract, which constitutes KRW 000,000,000, and KRW 0000,000, and among them, stated that the contract is prepared to pay less capital gains tax, and the contract is prepared to pay less capital gains tax, and the contract is for bank loans.”

③ As seen earlier, the taxation of capital gains tax at the time of 202 under the former Income Tax Act was based on the standard market price. However, as the Plaintiff acquired the instant real estate by auction on March 15, 2002 and sold it to BB on December 12, 2002, the Plaintiff is obliged to calculate the actual transaction price as it constitutes a short-term transfer within one year. Therefore, there was sufficient reason to prepare a multiple contract to the Plaintiff. On the other hand, BB demanded the Plaintiff to submit a contract for increasing the sales price in order to raise the amount of the instant real estate mortgage loan. However, the capital gains tax at the time of the instant real estate purchase was calculated based on the principle of calculating the standard market price (on January 1, 2007, the assessment of actual transaction price was completely implemented) and even if the instant real estate was sold in the future, it seems that the Plaintiff easily responded the Plaintiff’s demand to prepare a multiple contract, as there was

3) Therefore, the plaintiff's above assertion against the above facts of recognition is without merit.

3. Conclusion

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