The meaning of the provision on deemed donation under Article 32-2(1) of the Inheritance Tax Act

The provision on the constructive gift under Article 32-2(1) of the Inheritance Tax Act is interpreted as the provision that, inasmuch as there is an agreement between the actual owner and the nominal owner or if the registration was made with respect to communication, there is no substantial donation among them, that is, there is no real donation between them, or not, a trust under the Trust Act is established or a trust under the Trust Act is not established, and a donation is deemed to exist when the registration was made between the actual owner and the nominal owner.

Article 32-2(1) of the Inheritance Tax Act

Supreme Court Decision 86Nu290 Decided October 14, 1986

Gyeong-nam Corporate Corporation

The director of the tax office.

Seoul High Court Decision 85Gu665 delivered on December 3, 1985

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

We examine the grounds of appeal.

1. According to the reasoning of the judgment below, since the Plaintiff Company’s business purpose of building and selling housing was to purchase a newly built site in Gangnam-gu Seoul Metropolitan Government-dong and Yang Jae-dong district, since November 1, 1981, the lower court, based on its reasoning, did not err in securing the site due to avoid the transfer of the land to the Plaintiff Company, not the standard market price when the Plaintiff Company trades with the legal entity, and as such, it would have caused problems in securing the site due to the Plaintiff Company’s failure to perform the transfer of the land, the lower court deemed that the Nonparty’s actual acquisition of the land of 13 lots, including Nonparty 1, 2, and 3, who were the full-time executives of the Plaintiff Company, was not allowed by the former 127 square meters of forest land (which would be deemed as 123 square meters of forest land) as well as 1,197,154,000 square meters of the total price of the Plaintiff Company’s property under the name of each of the above Articles 2-2 and 3, which completed the registration of ownership transfer under the Plaintiff Company’s name.

2. However, since Article 32-2(1) of the Inheritance Tax Act provides that if there is an agreement between the actual owner and the nominal owner or there is communication, so long as such registration has been made, there is no substantial donation between them, that is, if there is no internal relationship between them, or if a trust is established under the Trust Act, or a trust is merely a trust or a registration is made between them is made, the donation shall be deemed to have been made (see Supreme Court Decision 86Nu290 delivered on October 14, 1986). Thus, even if there are circumstances such as the original sale date, so long as the actual owner and the nominal owner make such registration under communication, the above provision on deemed donation shall be applied. Accordingly, in the case of this case, the judgment of the court below is excluded from the application of Article 32-2(1) of the above Inheritance Tax Act, and the defendant's taxation disposition of this case, which applied this provision, is not erroneous in the misapprehension of the above provision.

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

Justices Lee Byung-su (Presiding Justice)