【Holding】

[1] Where there exist grounds under any subparagraph of Article 17-3(1) of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act, which prescribes the grounds on which the net profit and loss for the most recent three years cannot be computed or the net profit and loss for the most recent three years is abnormal so that it appears unreasonable to compute the net profit and loss value per share on the basis thereof, whether the net profit and loss value per share may be computed on the basis of the value calculated by the formula prescribed in Article 56(1) subparagraph 1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (negative in principle), and whether the same applies even where ‘the average value of the estimated profit per share computed by two or more credit rating agencies or accounting firms’ prescribed in Article 56(1) subparagraph 2 of the Enforcement Decree of the same Act has not been computed or the requirements for its application have not been met so that the value prescribed in subparagraph 2 cannot be applied (affirmative) / The method of appraising the net profit and loss value per share in such a case

[2] In a case where the competent tax office head imposed inheritance tax on unlisted shares of Company B, which A and other co-heirs inherited upon the death of the decedent in February 2007, by appraising them on the basis of the value calculated by the formula prescribed in Article 56(1) subparagraph 1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, the Court held that the competent tax office head's computation of the net profit and loss value per share on the basis of that value was unlawful, being based on erroneous premises, such as that the land which Company B had purchased from the decedent, used for two years or more in its objective business of leasing, and sold around April 2006 was not a tangible asset under the corporate accounting standards

【Referenced Statutes】

[1] Article 63(1) subparagraph 1 item (c) of the former Inheritance Tax and Gift Tax Act (before amended by Act No. 8828 on December 31, 2007) [see current Article 63(1) subparagraph 1 item (b)], Article 54(1), (2), and (4) and Article 56(1) subparagraph 1 (see current Article 56(1)) and subparagraph 2 (see current Article 56(2)) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (before amended by Presidential Decree No. 20621 on February 22, 2008), Article 17-3(1) subparagraph 6 of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act (before amended by Ordinance of the Ministry of Finance and Economy No. 579 on October 29, 2007) [2] Article 63(1) subparagraph 1 item (c) of the former Inheritance Tax and Gift Tax Act (before amended by Act No. 8828 on December 31, 2007) [see current Article 63(1) subparagraph 1 item (b)], Article 54(1), (2), and (4) and Article 56(1) subparagraph 1 (see current Article 56(1)) and subparagraph 2 (see current Article 56(2)) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (before amended by Presidential Decree No. 20621 on February 22, 2008), Article 17-3(1) subparagraph 6 of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act (before amended by Ordinance of the Ministry of Finance and Economy No. 579 on October 29, 2007)

【Referenced Precedents】

[1] Supreme Court Decision 2010Du26988, April 26, 2012 (Gong 2012Sang, 900)
Supreme Court Decision 2011Du31253, November 14, 2013 (Gong 2013Ha, 2266)

(Source : Supreme Court Decision 2021Du53320, January 9, 2025 | Judicial Information Disclosure Portal, Precedents)