Litigation Revocation of Capital Gains Tax Imposition Disposition

The legality of the determination of the officially assessed individual land price of the instant land, whether the instant land is subject to special long-term holding deduction, and whether the non-reported additional tax is lawful.

The contents of the judgment are the same as attachment.

2017Gudan8020 Revocation of Disposition of Imposing Transfer Income Tax

Kim*

AA Head of the Tax Office

October 20, 2017

October 24, 2017

1. All of the plaintiff's claims are dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 74,124,464 for the year 2015 against the Plaintiff on August 17, 2016 is revoked.

1. Details of the disposition;

(1) On August 12, 1994, the Plaintiff acquired nine parcels of Gangwon-gu, Gangwon-gu, by inheritance through consultation and division. On August 12, 1994, the Plaintiff reported and paid the transfer income tax for the year of 2015 after transferring each of the above parcels of land in sequence around 2015 as indicated below.

The Plaintiff applied the acquisition value of the land as the standard market price upon filing a return of capital gains tax as above, but the acquisition value of the land No. 1, the land No. 2, and the land No. 3, respectively, was applied to the acquisition value of each surrounding market price as a voluntary example of business calculation, and the special long-term holding deduction for the land

The Plaintiff did not voluntarily pay the capital gains tax reported as above with respect to the land Nos. 1, 2, and 3 of this case. The Defendant determined and notified the total amount of KRW 21,172,363 (= KRW 4,274,184 + KRW 14,321,66 + KRW 2,576,513) by applying the penalty tax in bad faith as follows.

On August 17, 2016, the defendant applied the acquisition value of the land Nos. 1, 2, and 3 to the plaintiff as the standard market value (individually published land value) of the commencement date of the inheritance, and excluded the special long-term holding deduction on the land No. 3, while applying the non-reported additional tax, etc. on the land No. 2 reported after the expiration of the preliminary return period of the transfer income tax (2 months from the last day of the month to which the date of transfer belongs, and Article 105 (1) 1 of the Income Tax Act), "an increase or decrease of the transfer income tax (including additional tax) for the land No. 2015 as indicated below," and additionally notified the difference of 74,124,464 won.

Applicant filed a request for examination with the Commissioner of the National Tax Service on November 11, 2016, however, the Commissioner of the National Tax Service dismissed the request for examination on April 4, 2017.

Facts without dispute over the basis of recognition, Gap evidence 2, 4, 5, Eul evidence 3-1 through 5, Eul evidence 4-1, 2, 3, Eul evidence 5, the purport of the whole pleadings

2. Whether the instant disposition is lawful

(1) In calculating gains on transfer of inherited land, the acquisition value shall be deemed the actual transaction value at the time of acquisition (the main sentence of Article 97(1)1(a) of the Income Tax Act and Article 163(9) of the Enforcement Decree of the Income Tax Act).

The value of land which is the property on which inheritance tax is levied shall be the value normally established when transactions are made freely between many and unspecified persons as of the commencement date of inheritance (Article 60(1) of the Inheritance Tax and Gift Tax Act), and "market price" shall include the expropriation price, public sale price, appraisal price, etc., which is recognized as the market price, as prescribed by Presidential Decree (Article 60(2) of the Inheritance Tax and Gift Tax Act).

Meanwhile, according to Articles 95(2) and 104-3(1)1(a) of the former Income Tax Act (amended by Act No. 13558, Dec. 15, 2015; hereinafter the same), and Article 168-8(2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26922, Jan. 22, 2016; hereinafter the same), a farmer shall not be entitled to a special long-term holding deduction because he/she resides in a location of farmland and engages in self-regulation under subparagraph 5 of Article 2 of the Farmland Act or in land for non-business.According to Article 2(5) of the Farmland Act, the term "self-cultivation" means that a farmer is constantly engaged in cultivating or cultivating crops or perennial plants on his/her own farmland, or an agricultural corporation cultivates or cultivates at least 1/2 of crops with its own labor, or an agricultural corporation cultivates or cultivates perennial plants on its own farmland.

The Plaintiff asserted that, in light of the case where around October 2003, the neighboring land was sold at KRW 5,400 per square meter, and the case where the neighboring land was expropriated at KRW 9,100 per square meter, even though it was sold at KRW 3,600 per square meter, around 192, and around October 200, the acquisition value of the land 1,2, and 3 in this case should be determined at approximately KRW 2.5 to 3 times of the officially assessed individual land price. ② The Plaintiff managed the land 3 in this case for a long time and received farmland rent of KRW 4,00,000 per annum. ③ The special long-term holding deduction should be applied to the Plaintiff on the ground of the use of the land 4,00,000 won per annum. ③ The Defendant did not send the preliminary return and payment guide on the transfer of the land 2 in this case to the Plaintiff, and thus, did not report the Plaintiff’s obligation to report the transfer of the land 3 in this case.

Article 20 of the Civil Code provides that the disposition of this case is legitimate and that of this case is without merit.

According to the relevant Acts and subordinate statutes mentioned above, the acquisition value of the land Nos. 1, 2, and 3 of this case shall conform to the market price as of the commencement date of inheritance (the date of August 12, 1994). If it is difficult to calculate the market price, the individual published land price shall be deemed the market price. The "market price" refers to the price generally recognized as being established when transactions are freely conducted between many and unspecified persons. It includes the price of expropriation, public sale price, appraisal price, etc., which is recognized as the market price pursuant

According to Article 49 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, in order to recognize the expropriation price, public sale price, appraisal price, etc. as the market price of inherited property, the sale, appraisal, expropriation, auction or public sale should, in principle, be made within six months before or after the base date of appraisal (in case of inheritance, before or after the

However, the purchase and sale price claimed by the Plaintiff is more than 6 months before and after the commencement of the inheritance, and thus does not meet the requirements prescribed in Article 49 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, since the purchase and sale price of neighboring land does not meet the requirements under Article 49 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, and there is no ground to view that the sale and expropriation price of neighboring land falls under the price at the time of the commencement of inheritance where transactions are made freely among unspecified persons with respect to the land Nos. 1, 2, and 3 of this case. Thus, the market price at the time of the commencement of the inheritance of the above sale and expropriation price cannot be calculated on the basis of the above sale and expropriation price of the land at the time of the commencement of the inheritance, unless there is any data to calculate the market price at the time of the commencement of the inheritance of the land at the time of the first, 2, and 3 of this case

○ Even based on the Plaintiff’s assertion, the Plaintiff merely leased the instant third land to another person as farmland, and as long as the Plaintiff failed to satisfy its own requirements, the instant third land constitutes the non-business land subject to the exclusion of special deduction for long-term holding.

The plaintiff who transferred ○ land shall file a preliminary return on the tax base of transfer income within three months from the end of the month in which the transfer date belongs; the final return on the tax base of transfer income shall be filed from May 1 to May 31 of the year following the relevant taxable period (Articles 105 and 110 of the Income Tax Act); and the additional tax amount equivalent to 20% of the amount of tax to be paid for the return if he/she violates his/her obligation to file a return on the tax base of transfer income (Article 47-2(1)2 of the Framework Act on National Taxes) is imposed (Article 47-2(1)2 of the Framework Act on National Taxes). However, in order to facilitate the exercise of the right to impose tax and the realization of the tax claim, the additional tax is reduced by 50% because the plaintiff filed a return after the due date within one month after the due date for filing the preliminary return on the land of this case (Article 48(2)2(a) of the Framework Act on National Taxes).

The capital gains tax is a national tax for which a taxpayer voluntarily calculates his tax base and tax amount and reports and pays it to a taxpayer. Since the tax authority’s guidance for tax payment is merely conducted in terms of tax administration for the convenience of taxpayers, it cannot be justified that the Defendant, a taxpayer, failed to send a preliminary and payment notice for capital gains tax on the land No. 2 of this case to the Plaintiff, which is the taxpayer. Thus, it cannot be said that the Plaintiff, a taxpayer, failed to properly perform his obligation for preliminary and final return for capital gains tax base, and there is no ground to deem that the Defendant’s imposition of an additional tax for non-return against

3. Conclusion

Therefore, the plaintiff's claim is dismissed for lack of reason.