Whether calculating the gift value of the building of this case is legitimate as the market price of comparative apartment

The market price includes the expropriation price, public sale price, and appraisal price of the property concerned, and the transaction price for the property concerned within the evaluation period is recognized as the market price.

Article 49 of the Inheritance Tax and Gift Tax Act (Principle of Evaluation, etc.)

Suwon District Court 2017Guhap62052 Revocation of Disposition of Imposing Gift Tax

O KimO

O Head of tax office

.1, 2017

2017.08.08

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant's decision that the disposition of imposition (including additional tax for unfaithful payment) of gift tax of KRW 73,946,880 against the plaintiff on March 4, 2016 is revoked.

1. Details of the disposition;

A. On March 22, 2013, the Plaintiff: (a) donated 00-Gu 000, 000, 147, and 1205-dong 1205 (hereinafter “instant apartment”); and (b) completed the registration of ownership transfer based on the donation under the name of the first person on March 27, 2013.

B. The Plaintiff’s gift tax calculated following the donation of the apartment of this case

B paid gift tax of KRW 7,760,000 on June 30, 2013, with the standard market price of the apartment of this case as KRW 512,00,000 (the base date for publication: January 1, 2012).

C. Based on the result of cross-integrated audit between August 24, 2015 and September 10, 2015 by the commissioner of the regional tax office having jurisdiction over theff, the director of the regional tax office confirmed the fact that s apartments No. 10, 300,000 won, which are the same area located in the same complex as the instant apartment, were traded in KRW 710,00,00 and notified the Defendant of the data for taxation.

D. On March 4, 2016, the Defendant decided and notified the Plaintiff of KRW 79,706,880 (including additional taxes for underreporting, KRW 5,760,00, KRW 16,346,80, and KRW 16,880 for an erroneous return, and KRW 16,380 for an erroneous return, respectively) pursuant to Article 60(1) and (2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 12168, Jan. 1, 2014; hereinafter “former Inheritance Tax and Gift Tax Act”) and Article 49(1) and (5) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 24638, Jun. 28, 2013; hereinafter “former Enforcement Decree of the Inheritance Tax and Gift Tax Act”).

E. The Plaintiff appealed and filed an objection on May 16, 2016, but was dismissed on July 7, 2016. The Defendant corrected ex officio the amount of penalty tax for underreporting KRW 5,760,000 from among the amount of penalty tax for underreporting originally imposed on the Plaintiff (hereinafter “instant disposition”).

F. On August 24, 2016, the Plaintiff filed an appeal with the Tax Tribunal on August 24, 2016, but the Tax Tribunal dismissed the claim on November 29, 2016.

Facts that there is no dispute for recognition, each entry in Gap's 1 through 5 (including virtual numbers), and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Article 49 (5) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act shall apply to the area recognized as the market price.

The location and use category and the standard market price are identical or similar. Since the apartment of this case is considerably different from the comparative apartment of this case, the apartment of this case is unlawful in the disposition of this case based on the transaction example of the comparative apartment of this case.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

(c) Fact of recognition;

1) The comparative apartment of this case is the same area located in the same complex as the apartment of this case

The apartment building of this case among the 15th apartment building is located on the 12th floor, and the comparative apartment of this case is located on the 3rd floor, and the building is located on the south side of the comparative apartment of this case, and the apartment of this case has a view in the king direction.

2) Specific Dong number, size, location, and transaction date of the apartment of this case and the comparative apartment of this case

i. The amount of transactions, and the standard market price are as follows:

Facts without any dispute, Gap's evidence 4 through 9, Eul's evidence 1 and 2, and the purport of the whole pleading.

D. Determination

The main text of Article 60(1) of the former Inheritance Tax and Gift Tax Act provides that the value of the property on which the gift tax is levied shall be the market value as of the date of donation, and Article 60(2) of the same Act provides that the market value under paragraph (1) of the same Article shall be the value which is generally accepted in cases of free transactions between many and unspecified persons and which is recognized as the market value under the conditions as prescribed by the Presidential Decree, such as the expropriation, public sale price, appraisal price, etc. In addition, Article 49(1) of the Enforcement Decree of the same Act provides that the transaction value in cases of a transaction of the relevant property during the period of three months before or after the date of donation shall be the market value (Article 1) and Article 60(5) of the same Act provides that the transaction value shall be deemed the market value in cases where there is a transaction fact of the relevant property, location, use, and category,

As above, Article 60(1) of the former Inheritance Tax and Gift Tax Act declares the principle of market value in the valuation of donated property. Article 60(2) of the same Act provides for a broad standard that the market value is formed through a general and normal transaction, which can be recognized as the market value on the premise that an objective exchange value should be adequately reflected, and delegates the specific scope to the Presidential Decree. Therefore, applying Article 49(5) and Article 49(1)1 of the Enforcement Decree upon delegation, in order to consider the transaction value of similar property generated within three months before and after the date of donation as the market value of donated property, there is no price change between the date of donation and the date of transaction of similar property as at the date of donation (see Supreme Court Decision 2011Du3038, Apr. 26, 2012).

In light of the following circumstances, i.e., (i) the apartment of this case and the Dong and the number of floors are different from each other; (ii) the apartment of this case among the 15th apartment building is located in the 12th floor and is generally superior to the comparative apartment of this case located in the 3rd floor; and (iii) the apartment of this case is located in the 5th apartment of this case with the 512,000,000,000 won in the standard market price of the 5th apartment of this case, considering the fact that the actual sale price of this case was 710,00,000,00 won in the 5th apartment of this case and the above facts, it is reasonable to view that the combination apartment of this case was traded adjacent to the donation date of this case, but its location is similar to that of the apartment of this case; and (iv) the defendant's sale price of this case is identical or similar to the sale price of the apartment of this case, and there is no objective reason to view that there was a sudden change at the sale price at the time of this case.

3. Conclusion

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