Open Decision Ledger · Tax & international taxation
Corporate tax before or after loss carryforward in unlisted share valuation
Supreme Court, June 29, 2023, 2019Du56838 (judgment)
No holding summary · checked against points at issue. The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Case name: 증여세부과처분취소
Official text on the National Law Information Center
Question
Where unlisted shares transferred to a related party were valued under the supplementary method, must the 'corporate income tax for the relevant business year' deducted from each business year's income under Article 56(4)(ii)(a) of the former Enforcement Decree of the Inheritance and Gift Tax Act be computed on income before or after deduction of loss carryforward?
Holding
The Court adopted the reading that 'corporate income tax for the relevant business year' means the amount of corporate tax calculated by applying the rate to income before deduction of loss carryforward. It therefore upheld the judgment below that the disposition was lawful, the disposition having been premised on the tax authority's calculation of the market value of the shares as KRW 534,459 per share and on the gift tax assessed under Article 35(1) of the former Inheritance and Gift Tax Act on the finding that the plaintiffs had transferred the shares above market value and received a benefit from a related party. All the plaintiffs' appeals were dismissed.
Points at issue, verbatim
관할 세무서장이 ‘당해 사업연도의 법인세액’을 ‘이월결손금을 공제하기 전의 소득’으로 계산하여, 갑이 위 주식을 시가보다 높은 가액으로 양도하여 특수관계인으로부터 그에 따른 이익을 증여받았다고 보아, 구 상속세 및 증여세법 제35조 제1항을 적용하여 갑에게 증여세를 결정·고지한 사안에서, 위 처분이 적법하다고 본 원심판단이 정당하다고 한 사례
Unofficial English translation
the head of the tax office having jurisdiction computed 'the corporate tax amount for the relevant business year' as 'the income before deduction of loss carryforwards' and, deeming that A had transferred the said shares at a price higher than the fair market value and thereby received a gift of the corresponding benefit from a specially related person, assessed and notified A of gift tax by applying Article 35 (1) of the former Inheritance Tax and Gift Tax Act, the holding of the court below that the said disposition was lawful was correct
Disposition
Dismissed Stated in the decision
상고를 모두 기각한다. 상고비용은 원고들이 부담한다.
Unofficial English translation
All appeals are dismissed. The appeal costs shall be borne by the plaintiffs.
Form of the test
Elements stated Stated in the decision
‘당해 사업연도의 법인세액’은 ‘이월결손금을 공제하기 전 소득에 세율을 적용한 법인세액’으로 해석하는 것이 타당하다고 보아
Unofficial English translation
deeming it reasonable to interpret 'the corporate tax amount for the relevant business year' as 'the corporate tax amount calculated by applying the tax rate to the income before deduction of loss carryforwards'
Factors
- 구 상속세 및 증여세법 시행령 제56조 제4항의 입법 취지
- 갑이 부친에게 비상장법인 주식 1주당 양도가액을 구 상속세 및 증여세법 제63조의 보충적 평가방법에 따라 순손익가치와 순자산가치를 가중평균하는 방법으로 정하여
- ‘이월결손금을 공제한 후의 소득’으로 계산하여 양도 후 양도소득세를 신고·납부하였는데
- 관할 세무서장이 ‘당해 사업연도의 법인세액’을 ‘이월결손금을 공제하기 전의 소득’으로 계산하여
- 위 처분이 적법하다고 본 원심판단이 정당하다고 한 사례
Unofficial English translation
• The legislative intent of Article 56 (4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act
• A determined the transfer price per share of the unlisted company's shares transferred to his father by the method of weighting the net income value and the net asset value in accordance with the supplementary valuation method under Article 63 of the former Inheritance Tax and Gift Tax Act,
• computed it as 'the income after deduction of loss carryforwards' and filed and paid capital gains tax after the transfer,
• the head of the tax office having jurisdiction computed 'the corporate tax amount for the relevant business year' as 'the income before deduction of loss carryforwards', and
• a case where the holding of the court below that the said disposition was lawful was correct
Relation to precedent
Follows earlier decisions Stated in the decision
대법원 2013. 11. 14. 선고 2011두22280 판결 참조
Unofficial English translation
See Supreme Court Decision 2011Du22280 decided November 14, 2013.
Decisions referred to
[1] 대법원 2013. 11. 14. 선고 2011두22280 판결(공2013하, 2263)
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
Does the same before-loss-carryforward rule govern shares transferred under Article 56(4) of the Enforcement Decree as amended on 21 February 2014?
An amendment to Article 56(4) of the Enforcement Decree, or a later Supreme Court decision on the meaning of corporate income tax for the relevant business year, would require this entry to be read again. A record showing that no loss carryforward existed, or that the shares were valued by a method other than the weighted average of net income value and net asset value, would also change the analysis.
Cross-family AI independent reading & axis check
6 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-25
A reader from another model family (GPT-6 Astra), given the official text but not the primary reading, agreed on 6 of the 8 axes; the readings differed on axis 4 (form of the test), axis 8 (open question and revisit condition).
Axis 4 (Form of the test): Primary “Elements stated” vs Independent “Existing test applied”
The primary treats the holding as a general rule for computing the deductible tax, while the independent reading treats it as a rule applied to the valuation and gift tax assessment in this case.
위 처분이 적법하다고 본 원심판단이 정당하다고 한 사례Axis 8 (Open question and revisit condition): Primary “Does the same before-loss-carryforward rule govern shares transferred under Article 56(4) of the Enforcement Decree as amended on 21 February 2014?” vs Independent “How should tax credits or exemptions affect the corporate tax amount deducted when calculating net earnings for this valuation?”
The primary asks whether the same rule applies to shares valued under the Decree as amended in 2014, while the independent asks how tax credits or exemptions should affect the deducted tax.
관할 세무서장이 ‘당해 사업연도의 법인세액’을 ‘이월결손금을 공제하기 전의 소득’으로 계산하여, 갑이 위 주식을 시가보다 높은 가액으로 양도하여 특수관계인으로부터 그에 따른 이익을 증여받았다고 보아, 구 상속세 및 증여세법 제35조 제1항을 적용하여 갑에게 증여세를 결정·고지한 사안에서, 위 처분이 적법하다고 본 원심판단이 정당하다고 한 사례Raw responses and comparison record: Protocol · Blind readings (JSONL) · Axis comparison (JSONL) · SHA-256 (JSON)
Lower-court contrast & scope of application
Lower-court reading vs. Supreme Court holding
Lower-court context: The Seoul High Court, in its judgment of 2 October 2019 (2019Nu30920), held that the net income amount for valuing the shares must deduct corporate income tax calculated by applying the rate to income before deduction of loss carryforward. On that basis it found the tax office's recalculation of the market value at KRW 534,459 per share correct and upheld the gift tax assessment made under Article 35(1) of the former Inheritance and Gift Tax Act, after the reduction amendments to the assessed amounts.
Supreme Court standard: The Supreme Court found no error in that reading. It held that the court below had correctly interpreted the meaning of corporate income tax for the relevant business year in light of the meaning of net income value, the meaning of net income as a concept peculiar to the Inheritance and Gift Tax Act, and the purpose of the loss carryforward system, and that the appeal grounds disclosed no error of law affecting the judgment. With the unanimous opinion of the participating Justices, it dismissed all the plaintiffs' appeals and placed the costs of appeal on them.
Distinguishing conditions
- A business year in which no loss carryforward exists, so that income before and after the deduction is the same.
- A case in which the per-share transfer value was not fixed by weighting the net income value and the net asset value under the supplementary method of Article 63 of the former Inheritance and Gift Tax Act.
- A transfer governed by the amended Enforcement Decree, since the decision applied the Decree as it stood before the amendment by Presidential Decree No. 25195 of 21 February 2014.
Record verification notes
Set the two calculations against each other: the plaintiffs' corporate tax figure based on income after deduction of loss carryforward, and the tax office's figure based on income before deduction, and see which market value each produces for the shares. Then match the actual transfer price of KRW 557,137 per share against the market value the applicable method produces, since the gift tax follows from a transfer above market value to a related party. Confirm also which version of Article 56(4) of the Enforcement Decree governs the relevant business year, because the Court applied the version before the amendment of 21 February 2014.
From the official text
Points at issue
[1] 구 상속세 및 증여세법 시행령 제56조 제4항의 입법 취지 [2] 갑이 부친에게 비상장법인 주식 1주당 양도가액을 구 상속세 및 증여세법 제63조의 보충적 평가방법에 따라 순손익가치와 순자산가치를 가중평균하는 방법으로 정하여, 순손익액을 산정할 때 각 사업연도 소득에서 차감해야 할 대상으로 구 상증세법 시행령 제56조 제4항 제2호 (가)목에서 정하고 있는 ‘당해 사업연도의 법인세액’을 ‘이월결손금을 공제한 후의 소득’으로 계산하여 양도 후 양도소득세를 신고·납부하였는데, 관할 세무서장이 ‘당해 사업연도의 법인세액’을 ‘이월결손금을 공제하기 전의 소득’으로 계산하여, 갑이 위 주식을 시가보다 높은 가액으로 양도하여 특수관계인으로부터 그에 따른 이익을 증여받았다고 보아, 구 상속세 및 증여세법 제35조 제1항을 적용하여 갑에게 증여세를 결정·고지한 사안에서, 위 처분이 적법하다고 본 원심판단이 정당하다고 한 사례
Unofficial English translation
[1] The legislative intent of Article 56 (4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act [2] A case where, in a case in which A determined the transfer price per share of the unlisted company's shares transferred to his father by the method of weighting the net income value and the net asset value in accordance with the supplementary valuation method under Article 63 of the former Inheritance Tax and Gift Tax Act, and, in calculating the net income amount, computed 'the corporate tax amount for the relevant business year', which is designated as an amount to be deducted from the income of each business year under subparagraph 2 (a) of Article 56 (4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, as 'the income after deduction of loss carryforwards', and filed and paid capital gains tax after the transfer, the head of the tax office having jurisdiction computed 'the corporate tax amount for the relevant business year' as 'the income before deduction of loss carryforwards' and, deeming that A had transferred the said shares at a price higher than the fair market value and thereby received a gift of the corresponding benefit from a specially related person, assessed and notified A of gift tax by applying Article 35 (1) of the former Inheritance Tax and Gift Tax Act, the holding of the court below that the said disposition was lawful was correct
Summary of the holding
The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Order
상고를 모두 기각한다. 상고비용은 원고들이 부담한다.
Unofficial English translation
All appeals are dismissed. The appeal costs shall be borne by the plaintiffs.
Provisions referred to
[1] 구 상속세 및 증여세법 시행령(2014. 2. 21. 대통령령 제25195호로 개정되기 전의 것) 제56조 제4항 [2] 상속세 및 증여세법(2013. 5. 28. 법률 제11845호로 개정되기 전의 것) 제35조 제1항, 제63조 제1항 제1호 (다)목(현행 제63조 제1항 제1호 (나)목 참조), 구 상속세 및 증여세법 시행령(2014. 2. 21. 대통령령 제25195호로 개정되기 전의 것) 제54조 제1항, 제2항, 제56조 제4항 제2호 (가)목
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