Cheongju District Court-2015-Gu Partnership-105 ( May 21, 2015)

It is assessed as a supplementary assessment method for transfer of non-listed stock at low price without a special relationship and imposes gift tax on transfer margin.

(See the first instance judgment) The term "market price" means an objective exchange price formed through a general and normal transaction, so in order to recognize such transaction example as the market price, the circumstances should be recognized that the transaction is made in a general and normal manner and properly reflect the objective exchange value at the time of the donation.

Daejeon High Court (Cheongju)-2015-Nu1068 (2016.07)

ParkA et al. 1

Head of the Cheongju Tax Office

Cheongju District Court 2015Guhap105

July 20, 2016

May 21, 2015

1. All appeals filed by the plaintiffs are dismissed. 2. The costs of appeal are assessed against the plaintiffs.

The judgment of the court of first instance shall be revoked. The gift tax that the director of the tax office of Cheongju made on March 3, 2014 to the plaintiff Park Jong-A.

48,207,290 won and gift tax imposed on the Plaintiff AB on March 3, 2014 by the head of the Dong-ju Tax Office.

48,207,290 won and gift tax imposed on March 3, 2014 by the director of the Seo-gu Daejeon District Tax Office to Plaintiff CCC.

378,285,390 won shall be revoked.

1. Quotation of judgment of the first instance;

The court's reasoning concerning this case is as stated in the column of reasoning of the judgment of the court of first instance, except for dismissal or addition of some of the reasons in the judgment of the court of first instance as stated in Paragraph (2). Thus, it is citing it as it is in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the

2. Parts which are dismissed or added in the judgment of the first instance; and

(a) Of the four pages, the third column “leD” in the column of Chapter 4 is applied to “leD”, and the Defendant in Chapter 8 is applied to “Defendants” in Chapter 15.

B. On the other hand, the legislative intent of Article 35(2) of the Inheritance Tax and Gift Tax Act is to cope with an irregular act of donation and to promote fair taxation by imposing gift tax on the profits acquired by the counterparty in a case where profits equivalent to the difference between the price and the market price are de facto gratuitously transferred by means of manipulating the transaction price for the benefit of the counterparty. However, since the transaction between unrelated parties does not coincide with each other, it is difficult to deem that the difference was donated to the counterparty solely on the ground that there is a difference between the price and the market price, it is difficult to view that the difference was donated to the counterparty. In light of the above, the taxation requirement of Article 35(2) of the Inheritance Tax and Gift Tax Act is added to the case where the parties to the transaction who transferred or acquired the property at a low price had no justifiable reason for the transaction between unrelated parties, and where there is no reasonable reason to believe that the transfer of the property at a reasonable price reflects the objective exchange value, it is reasonable and reasonable to deem that the transferor would not have any justifiable reason under the circumstances of Article 20138(25(3).5).

C. On the 8th page 2 through 7, the following are met: “C.T.T.T.T. 1” (the competent office assessed the value of Cheong F’s heir who died on Apr. 9, 2008, according to the successful bid price at that time, while assessing the value of Cheong F’s shares, which are inherited property, according to the successful bid price at that time. However, on the sole basis of these facts, the pertinent tax office did not state the abnormal nature of the auction transaction at the time of imposing inheritance tax, and the pertinent auction bid price was calculated between 20 and 5 years after the date of trading each of the instant shares, and each of the above auction bid price was determined by the Seoul High Court 20 G.C. 16 G.T. 210 and 16 G.T. 216 on June 19, 2014, each of which was determined by the lower court’s order of 20GE 10 and 5 years after the date of trading each of the instant shares.

D. Part 8, Nos. 11 through 14 are as follows. "It is difficult for the plaintiffs to calculate the market price of each of the shares of this case". Since there is no transactional example that adequately reflects the objective exchange value with respect to each of the shares of this case, it is reasonable to view that the price of each of the shares of this case is the market price reflecting the objective exchange value formed by the general and normal transaction, and it is difficult to calculate the market price by any other means, the defendants calculated the value of each of the shares of this case according to the supplementary assessment method under the former Inheritance Tax and Gift Tax Act is legitimate. Accordingly, the plaintiffs acquired each of the shares of this case at a price substantially lower than the market

Furthermore, even though Hah had been in a position to easily grasp data, such as the asset of the friendship, which serves as the basis for evaluating the objective value of each of the instant shares and the high-value dividends, it is reasonable to deem that Hah transferred each of the instant shares to the Plaintiffs with the meaning of an inspection of personal friendship or business cooperation, without negotiating to favorable terms and conditions of transaction at the time of transfer of each of the instant shares, or without making an effort to see a new counterpart. If Hah had a reasonable economic person, it would have not traded under the aforementioned terms and conditions of transaction in the circumstances at the time of transfer of each of the instant shares. In addition, even if Hah had a lower price from the established members during the process of increasing Hah’s shares, it cannot be said that there are special circumstances to deem the transfer of each of the instant shares to be a normal transaction of each of the instant shares, so it is reasonable to deem that the transfer value of each of the instant shares was set at KRW 15,000 through 16,000 per share.

3. Conclusion

Therefore, the judgment of the first instance court is justifiable, and all appeals by the plaintiffs are dismissed as it is without merit. It is so decided as per Disposition.