early 2009 Jeon 2862 ( December 01, 2009)

The acquisition value in case of transfer by installments after land acquisition.

Where a land is transferred by installments after its acquisition, the acquisition value of the transferred land shall be calculated proportionally in proportion to the ratio of the area occupied by the land that is divided and transferred from the land before the division.

The contents of the decision shall be the same as attached.

Note ○

Daejeon Head of the District Tax Office

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The Defendant’s disposition of imposition of KRW 926,225,404 out of the capital gains tax of KRW 1,346,069,450 belonging to the year 206 against the Plaintiff on January 5, 2009 shall be revoked.

1. Circumstances of the disposition;

The following facts are not disputed between the parties, or are recognized by Gap evidence 1 through Gap evidence 9, Eul evidence 1, Eul evidence 2, Eul evidence 10 (including each number), and the whole purport of arguments.

A. On July 12, 2002, the Plaintiff, etc. purchased 652,764,300 land of 32-2 forest land in ○○○○-dong, ○○○○-dong, 32-2 forest land in 751-1, 843 square meters in 750-1, 750-1, and 750-2, 750-2, and 694 square meters in 652,764,300, and thereafter, on November 4, 2006, the Plaintiff sold ○○○-dong, ○○○-dong, ○○○-dong, ○○○-dong, ○○○-dong, 32-5 forest land in 273 square meters in 751-3, 409 square meters in 751-3, 400, 300 square meters in 750-63, 300.

B. The director of ○○ Regional Tax Office may conduct an investigation on the Plaintiff from November 3, 2008 to November 24, 2008.

In doing so, the transfer value of the instant land is KRW 3,510,000. The acquisition value is KRW 236,983,341, which is the amount equivalent to the ratio of the area of the instant land to the area of the land before subdivision based on the acquisition value of the land before subdivision. Accordingly, the Defendant calculated the transfer value of the instant land from KRW 3,510,00,000, less the above acquisition value and necessary expenses and KRW 8,756,590, excluding the above acquisition value and necessary expenses, as well as KRW 3,264,260,069, as gains from transfer, and imposed KRW 1,346,069,453 on the Plaintiff on January 5, 2009 (hereinafter “instant disposition”).

C. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on July 17, 2009 on March 31, 2009, but the Tax Tribunal dismissed the Plaintiff’s claim on December 1, 2009.

2. Determination as to the legitimacy of the instant disposition

A. The plaintiff's assertion

In the disposition of this case, the Plaintiff erroneously calculated the acquisition value and transfer value as follows. If so, the amount of the legitimate capital gains tax to be imposed on the Plaintiff is KRW 419,84,046, and thus, the amount of KRW 926,225,404, which is imposed in excess of the aforementioned amount, among the disposition of this case, should be revoked as it is unlawful.

(1) Since the number and size at the time of the transfer by the Plaintiff does not coincide with the parcel number and size at the time of the transfer of the instant land, the acquisition value of the instant land shall be calculated by the conversion price at the time of transfer by the method divided by the market price at the time of transfer after multiplying the actual transaction value at the time of transfer by the standard market price at the time of the transfer, pursuant to Article 97 (1) 1 (b) of the Income Tax Act. The acquisition value calculated by conversion price of the instant land at the time of transfer is unjust, even though the acquisition value is KRW 1,203,

(2) At the time of the purchase of the instant land before subdivision, the Plaintiff acquired the instant land jointly with the high-B by bearing KRW 60 million out of the purchase price, but only acquired the registration under the name of the Plaintiff. Since the Plaintiff received KRW 300 million from the transfer price of the instant land, it shall be calculated by subtracting KRW 300 million from the transfer price in calculating the transfer price.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) Judgment on the first proposal

(A) In calculating gains on transfer, Article 97(1)1 of the Income Tax Act provides that the method of calculating the acquisition value which is one of the necessary expenses to be deducted from the transfer value shall be calculated based on the actual transaction value, if it is impossible to verify the actual transaction value at the time of acquisition, it shall be calculated based on the conversion value prescribed by the Presidential Decree. Articles 163 and 176-2(2)2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22034, Feb. 18, 2010) provide that the conversion value shall be calculated by multiplying the ratio of the standard market value at the time of transfer to the standard market

(B) However, in the instant case, since the sale price of the land before division is confirmed, the acquisition price of the instant land should be calculated pro rataly as much as the area ratio of the instant land to the land before division. Thus, there is no room for applying the conversion price under Article 97(1)1 (b) of the Income Tax Act, and there is no illegality in the instant disposition that the Defendant calculated the actual transaction price by such method and calculated the acquisition price. Thus, this part of the Plaintiff’s assertion is without merit

(2) Judgment on the second argument

(A) Facts recognized

The following facts may be admitted by taking into account the following facts: each of the evidence mentioned above, each of the evidence set forth in Nos. 3 through 9 (including each number), and all of the arguments.

① Although the sales contract at the time of the purchase of the land before subdivision entered B as a joint purchaser, no entry is made in the shares of purchase by B, and the name of B was not entered in the contract at the time of transfer of the land in this case as the seller.

② At the time of the tax investigation with respect to the Plaintiff, the Plaintiff stated that, at the time of acquisition of the instant land, the highB entered into a request by the highB in order to guarantee the repayment of the acquisition fund borrowed from the highB to a questioning of the investigating official who asked for the reasons stated in the sales contract as the purchaser.

③ On February 10, 2003, highB registered its business as a credit business, but in fact commenced the credit business from the end of the 1980s. From August 1999 to January 2006, 1, 2006, 1,023,150,000 won was loaned to the Plaintiff, the Plaintiff’s husband, DamageCC, and DamageCC’s sales agent, KimD, etc. over nine times at the interest rate of 2.5% to 3.0% per month. The loan claim amounting to KRW 2,813,415,00,00, including interest 1,790,265,000, was paid out by the Plaintiff, etc. on November 22, 2007.

④ On September 14, 2005, 2005, ○○ District Court 2005Kahap1068, which received a provisional attachment order on the whole land including the instant land on September 14, 2005. On July 14, 2006, 2006, ○○○○○○○-dong 750-1, 545 square meters, 31 square meters prior to 750-2, 750-2, 751-14, 30 square meters prior to the same 750-2, 70-2, 751-144 square meters, 30 forest 298 square meters prior to the same 30 forest 298 square meters, and 32-26,600 square meters prior to the same 207 forest 2040 square meters, she applied for a compulsory auction and applied for a compulsory auction.

(B) Determination

If GoB, a credit service provider, purchased a certain portion of the land prior to the partition jointly with the Plaintiff without any separate agreement or preservation measures, it is difficult to accept the Plaintiff’s sole name to register the transfer of ownership as seen earlier with respect to the said portion of the land prior to the partition. Moreover, at the time of the tax investigation, the Plaintiff stated that GoB entered a high-B as a purchaser in the sales contract in order to secure a loan borrowed from GoB at the request of GoB as a credit service provider, and it was merely intended to collect the payment by means of compulsory execution, etc. as a creditor. In full view of the various circumstances, such as the fact that GoB, as the Plaintiff’s creditor, sold the instant land, etc. in order to secure the loan and did not have any circumstance to collect the payment, it is difficult to accept the Plaintiff’s right to purchase the instant land together with the Plaintiff, and it is not recognized that the Plaintiff and the Plaintiff jointly purchased the instant land at the same time, and there is no evidence to acknowledge otherwise.

(C) Therefore, this part of the Plaintiff’s assertion that, under the premise that highB received KRW 300 million out of the purchase price of the instant land as a joint purchaser of the instant land, it should be excluded from the calculation of the Plaintiff’s transfer price.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.