Methods of calculating gains on transfer of gift assets

According to Articles 124-2(2) and 48(2)3 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 8651, Aug. 20, 197), where the normal price is unclear, transfer margin shall be determined on the basis of both the transfer value and acquisition price based on the current base value, since the donated property appears to be the acquisition price at the time of acquisition.

Article 59(3) of the former Corporate Tax Act (Act No. 2932, Dec. 22, 1976); Article 124-2(2) and Article 48(2)3 of the former Enforcement Decree of the Corporate Tax Act (Presidential Decree No. 8651, Aug. 20, 1977);

Supreme Court Decision 82Nu557 Delivered on April 26, 1983

Maritime School, Mynam School

The director of Busan District Office

Daegu High Court Decision 82Gu129 delivered on May 4, 1982

The appeal is dismissed.

The costs of appeal shall be borne by the defendant.

The grounds of appeal are examined.

Article 59-2 and Article 59-3 of the Corporate Tax Act (amended by Act No. 2932 of Dec. 22, 1976) which was in force at the time of the instant case provides that transfer margin, which is the tax base of special surtax, shall be the amount obtained by subtracting the acquisition value and expenses prescribed by the Presidential Decree from the transfer value, and where the transfer value and acquisition value are unclear, the transfer value and acquisition value shall be the amount based on the statutory standard price prescribed by the Presidential Decree, respectively, and Articles 124-2 (2) and 48 (2) 3 of the Enforcement Decree of the Corporate Tax Act (amended by the Presidential Decree No. 8651 of Aug. 20, 197) provide that the acquisition value of donated property shall be the normal value at the time of its acquisition, and according to Article 13 and Article 7 of the Enforcement Decree of the said Act (amended by the Presidential Decree No. 7464 of Dec. 31, 1974), the current market value of land shall be the current market value at the date of acquisition.

In full view of the above provisions, in determining capital gains, either the transfer value or acquisition value shall be based on the same actual transaction value or the current market price, and any one of the above transfer and acquisition values shall not be fair in terms of the current market price. The donated property shall be treated as the acquisition value at the time of its acquisition, but when the normal price is unclear, the current market price shall be determined (see Supreme Court Decision 82Nu557, Apr. 26, 1983). It is reasonable to view the current market price or the current market price as the acquisition value at the time of the Plaintiff’s donation of the land on January 3, 1952 by deeming that the Plaintiff acquired the land on January 1, 1968.

Therefore, under the above view, the transfer value of the special surtax that should be determined on the basis of both the transfer value and the acquisition value of the special surtax on the land donated by the Plaintiff is unclear at the time of January 1, 1968 is justifiable in holding that the acquisition value of the real transaction amount is unlawful in the Defendant’s disposition that decided on the transfer margin based on the statutory standard price, and it cannot be said that there is no incomplete deliberation or misapprehension of legal principles,

Therefore, the appeal is dismissed, and the costs of the appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Lee Sung-soo (Presiding Justice)