When determining whether a debt is subject to deduction under the proviso of Article 29-4(2) of the Inheritance Tax Act

The purpose of Article 29-4 (1) and (2) of the Inheritance Tax Act is to prevent evasion of the gift tax which is convenient for onerous donation between the spouse, lineal ascendants or descendants, and therefore, in case of onerous donation between their spouses or lineal ascendants or descendants, whether or not any obligation of a donor taken over by a donee falls under the obligation of the provisions of the said proviso, shall be determined at the time of the relevant donation.

Articles 29-4(1) and 29-4(2) of the Inheritance Tax Act

Plaintiff

The director of Busan District Office

Daegu High Court Decision 86Gu330 delivered on November 20, 1987

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

The grounds of appeal are examined.

According to the reasoning of the judgment below, based on the evidence adopted by the court below, the plaintiff acquired 50,000,000 won of the non-party's obligation to return the lease deposit of this case as to the real estate of this case from the non-party, who was the mother of December 29, 1984, and thereafter recognized the fact that the creditors of the above lease deposit filed a lawsuit claiming the return of the lease deposit against the plaintiff, and the above judgment became final and conclusive on April 4 of the same year after receiving the favorable judgment against the plaintiff on March 4, 1986, the above obligation to return the lease deposit accepted by the plaintiff shall be deemed to constitute a judicial finalized obligation under the proviso of Article 29-4 (2) of the Inheritance Tax Act. Thus, in calculating the taxable amount of

Article 29-4 (1) of the Inheritance Tax Act provides that the total amount of donated property at the time of donation shall be the taxable value of donated property. In applying the provisions of paragraph (2) of the same Article, the amount of debt shall not be deducted even in cases where the donee takes over the obligation of the donor in view of occupation, sex, age, income, property status, etc.: Provided, That this shall not apply in cases where the donee, who is objectively deemed capable of performing the obligation in view of occupation, sex, age, financial status, etc., takes over the obligation of the State, local governments, and other financial institutions prescribed by the Presidential Decree, etc. or any judicial confirmation, etc., and thus, in order to prevent the evasion of the gift tax which is convenient for onerous donation between his spouse, lineal ascendants or descendants, or lineal ascendants or descendants. Therefore, in order to prevent the evasion of the gift tax which is convenient for onerous donation between his spouse, lineal ascendants or descendants, it shall be determined at the time of donation in question.

Therefore, as determined by the court below, the court below determined that the obligation to return the above lease deposit which the plaintiff accepted at the time of donation was not the obligation finalized at the time of donation, but if the lawsuit for return was instituted and finalized after the donation, it cannot be deemed that it constitutes a judicial obligation as defined in the proviso of the above provision of the law, but it constitutes a judicial obligation as defined in the above provision of the law and thus becomes the object of deduction. Thus, the court below erred in the misapprehension of legal principles as to the obligation to receive the lease deposit which is the object of deduction, which affected the conclusion of the judgment.

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Jong-soo (Presiding Justice)