A father and son who received a ‘tax bomb’ of about 500 million won by selling real estate worth 1.6 billion won at half price filed a lawsuit claiming that the market value calculation was illegal, but ultimately lost. According to the legal community on the 29th, the 4th Administrative Division of the Seoul Administrative Court (Chief Judge Kim Jeong-jung) dismissed the lawsuit filed
by father and son A, B, and C against the head of the Seongbuk Tax Office in Seoul to cancel the imposition of capital gains tax. Mr. A transferred half of his real estate stake in Nowon-gu메이저사이트, Seoul, which he acquired from his spouse for 700 million won 10 years ago, to his sons B and C
in October 2019 . The transfer price (acquisition price) reported to the tax office was 700 million won, the same as 10 years ago. However, the Seongbuk Tax Office believed that there was a problem with this value and requested an appraisal from two appraisal companies. As a result of the appraisal, the average price was 1.585 billion won, which was more than twice the price traded by Mr. A and his father. The evaluation base date was February 2020, approximately 4 months after the transaction. Seongbuk Tax Office judged this to be market value and imposed a total of 490 million won in capital gains tax and gift tax, including additional tax for failure to pay. Mr. A and his wife filed an administrative lawsuit when the Tax Tribunal did not accept their request for cancellation. They emphasized that since there were no similar transactions or appraised values at the time of the transaction, imposing taxes through retroactive appraisal violates tax legal principles.
However, in reality, it turned out that the same property as the property in question, located on a different floor of the same building and even used as an academy, was sold two days apart from the plaintiff’s transaction. The market price revealed by the appraisal was derived based on this similar transaction, and the court ruled that it “appropriately reflected the objective exchange value.”
They argued that the failure to report properly was due to differences of opinion in the interpretation or application of tax laws, and that there was a justifiable reason for not fulfilling the obligation, so the imposition of additional tax was illegal, but this was also not accepted. The court said, “This is nothing more than a mistake or mistake in the interpretation or application of the law. The plaintiffs could have identified similar transactions without difficulty if they had inquired at a brokerage office 150 meters away from the real estate, but there is no evidence that such efforts were made.” The reason for dismissal was stated.
The court did not accept the plaintiff’s argument that imposing additional tax without prior guidance or guidance was a violation of due process, saying, “There is no basis to believe that the head of the tax office is recognized with such an obligation under the law.”