National High Court Decision 2004No3492 (Law No. 30, 2005)

Transfer

Correction

Determination of the conversion price of shares at the time acquisition price is unclear;

Article 97 of the Income Tax Act (Calculation of Necessary Expenses for Transfer Income)

National High Court Decision 2006No1225

The assessment of capital gains tax of 5,256,700 won for the claimant on May 1, 2004 shall be calculated on the basis of the actual transfer value of 66,305,90 won and the tax base and tax amount shall be corrected by converting the acquisition value into the actual transfer value of 66,305,90 won.

1. Summary of disposition;

On November 9, 1999, the claimant transferred 258 shares of the Co., Ltd. (hereinafter referred to as "Co-ownership shares") and failed to pay the transfer income tax by the claimant, the disposition agency shall determine the transfer value of the shares at KRW 66,305,90 and the acquisition value at KRW 1,290 on May 1, 2004, the applicant notified the decision of KRW 7,501,90 of the transfer income tax for the year 1999 for the claimant, and notified the decision of KRW 20,000,000 on June 18, 2004 as acquisition value by reducing KRW 2,245,200 out of the above notified tax amount.

The claimant appealed against this and filed an appeal on September 8, 2004.

2. Opinions of the claimant and disposition agency;

A. The claimant's assertion

The claimant's acquisition value of the stock in question shall be 81,879,50 won and the transfer income tax shall be revoked by recognizing the acquisition value of the stock in question as 81,879,50 won, since the purchase price of the stock in question is 20,00,000 won for the down payment of the down payment of 20,00,000 won and the balance of 61,879,500 won for the acquisition of the stock in question.

(b) Opinions of disposition agencies;

The claimant asserts that the representative director of the KOOO and the representative director of the KOOOO have transferred the outstanding shares on May 1, 1998 and that the claimant has acquired the outstanding shares from OO on the same day. However, the OO only transferred the shares to the representative director of the KOOOOOO in relation to the transfer of shares and shares, and it does not have any relation to the claimant. Therefore, the claimant cannot be deemed to have acquired the outstanding shares from OO only with the contents of the statement on the change of shares and shares.

In addition, the claimant asserts that 20,000 won recognized as acquisition value at the time of filing an objection does not have any remaining down payment as down payment, and that 61,979,500 won should be additionally recognized as acquisition value. However, since no evidence is presented regarding the payment of down payment of 61,979,500 won, even if there is any balance other than 20,000 won, it cannot be known how much the remainder has been paid. Thus, the disposition of this case that 61,979,500 won claimed by the claimant cannot be recognized as acquisition value of the stock at issue, and only 2,245,200 won of the tax amount initially determined and notified as 7,501,90 won is justifiable.

3. Hearing and determination

(a) Points in dispute;

The issue is whether the actual acquisition value of the shares at issue is confirmed or not.

B. Relevant statutes

(1) Income Tax Act (amended by Act No. 6051 of Dec. 28, 1999)

Article 97 (Calculation of Necessary Expenses for Transfer Income) (1) Necessary expenses to be deducted from the transfer value in calculating transfer marginal profits of residents shall be as follows:

1. Acquisition value:

(b) In cases of assets other than those under item (a), the actual transaction price required for the acquisition of the relevant assets: Provided, That where it is impossible to confirm the actual transaction price at the time of acquisition, it shall be based on

Article 100 (Calculation of Gains from Transfer) (1) In calculating gains from transfer, when either of the transfer or acquisition values is based on the actual market price, the other shall be based on the actual market price, and when either of them is based on the standard market price, the other shall be based on the standard market price: Provided, That in such cases as prescribed by the Presidential Decree, if it is possible to verify the actual market price of either the transfer or acquisition, it shall be based on the actual market price, and the other not verifiable shall be based on the price converted by the method prescribed by the Presidential Decree.

(1) When any person liable to make a preliminary return under Article 105 or any person liable to make a final return under Article 110 fails to do so, the chief of the district tax office having jurisdiction over the place of tax payment or the director of the regional tax office having jurisdiction over the place of tax payment shall determine the tax base for transfer income and the tax amount of the relevant resident.

(4) If the chief of the district tax office or the director of the regional tax office having jurisdiction over the place of tax payment determines or revises the tax base of transfer income and the amount of tax under paragraphs (1) through (3), he shall determine or correct the tax base of transfer income and the amount of tax under Articles 96 and 97: Provided, That in case where the resident makes the preliminary return or the final return on the tax base of transfer income under Articles 96 (1) 6 and 97 (1) 1 (a) (proviso), and if the reported value is different from the fact, and if the head

C. Facts and determination

The claimant argues that since the claimant acquired the shares of this issue from 81,979,500 won, which are all shareholders of this case, it should be recognized as the actual transaction price at the time of the acquisition of the shares of this issue, and this is examined.

(1) According to the statement of changes in stocks and investment shares in the business year of 1998, the claimant acquired 258 shares of the corporation by sale and purchase, and leapO transferred 258 shares of the corporation to 1,290,000 won.

(2) According to the statement of the content that the claimant and the leO exchanged exchanged around April 2003, the two parties agreed to sell and purchase the shares of the OOOO and they agreed to each other in relation to the tax burden arising therefrom.

(3) According to the certificate of stock acquisition confirmed by the KOOOOO on April 30, 1998, the store number is 1.61, 17,630, 17,630, 2,500, and the purchaser appears in the "OO", and according to the documents confirmed on March 23, 1998, the contract deposit amount is 20,000,000 won out of the 1.61% of the shares of OOOO and the above shares have been acquired.

(4) In calculating gains on transfer under the provisions of Article 100 (1) of the Income Tax Act in wartime, one of the transfer values or acquisition values shall be based on the actual market price, and if either of them is based on the standard market price, the other shall be based on the standard market price: Provided, That in such a case as prescribed by the Presidential Decree, if one of the transfer values or acquisition values can be confirmed, it shall be based on the actual market price, and the other which cannot be confirmed shall be based on the price converted by the method as determined by the Presidential Decree, and shall include the case where stocks, etc. of a corporation other than a stock-listed corporation are transferred, such as the key stocks, etc. as determined by the Presidential Decree.

For the claimant's transfer of stock, the disposal agency shall determine the transfer value of the stock as 66,305,900 won which is the actual transaction value, and the acquisition value shall be 1,290,000 won which is the original face value, but at the time of filing an objection, it is confirmed by the resolution of the transfer income tax by recognizing the stock transfer margin as the actual transaction value in a document confirmed by the OOOOO in the case of filing an objection.

(5) It is recognized that the claimant acquired 258 shares from leO in the statement of the change of shares and the certificate of stock acquisition in the 1998 business year of OOO, because the claimant and leO have acquired 258 shares from leO, and that the claimant and leO have acquired shares of the issue from leO in the content certificate received by each other.

However, the claimant asserts that he/she acquired 81,979,500 won (the contract amount of KRW 20,000,000, the balance of KRW 61,979,500) from leO, and that he/she did not present objective data, such as financial transaction data, and only presents the confirmation document of OOO in a case where he/she does not have objectivity, so it is difficult to recognize the acquisition value claimed by the claimant as the actual transaction value.

On the other hand, the disposition agency recognized the acquisition value of the stock of the issue as acquisition value only 20,000 won of the purchase price based on the "OOO, share shares 1.16% of the down payment 20,000,000 of the purchase price," but it is not reasonable to recognize the acquisition value of the down payment 20,000 won of the purchase price, not the purchase price, but the down payment 20,000 won of the down payment 20,000 won of the down payment as acquisition value even after the other, in the confirmation document of March 23, 1998.

Therefore, the actual transaction price at the time of the acquisition of the stock at issue is unclear.

According to the proviso of Article 100 (1) of the Income Tax Act at the time of the transfer of the stock at issue, it is reasonable to determine the price converted on the basis of the actual transaction price of the stock at issue.

4. Conclusion

Although the claimant's assertion is without merit as a result of the review, it shall be determined as ordered by the provisions of Articles 81 and 65 (1) 2 and 3 of the Framework Act on National Taxes in the contents of the disposition.