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Man refuses tax on brother's inheritance, claims it was a loan paid back by sick sibling

April 1, 2024 - 14:21 By Yoon Min-sik
(Herald DB)

A South Korean man and his wife lost an administrative case related to their refusal to pay inheritance tax on money given to them by the man's now-deceased brother, with the court overruling their claim that the money was in exchange for the financial help they provided him.

According to officials, the Seoul Administrative court ruled against the plaintiffs, saying the state's tax authorities are justified in taxing 65 million won ($47,500) for the 260 million won the deceased transferred to his brother before dying.

The plaintiffs said they had been taking care of the man, who had mental illness, until his death in April of 2017. Five years before his death, the deceased sold them his apartment in Seoul for 875 million won.

The Seongdong Tax Office -- who had been investigating the taxes related to the deceased -- found in June of 2019 that the he had transferred money back to the plaintiffs and considered the money his inheritance to his brother and the wife. It notified the findings to the Banpo Tax Office, which then imposed the inheritance tax on the plaintiffs.

The plaintiffs claimed that the deceased was simply paying back the money he owed them, as they had paid the deposit fee for the tenant moving out of the brother’s home. They also claimed to have provided financial care for the brother, including his living expenses and the hospital fees.

The court rejected their claims, saying that the evidence they provided only covered the medical fees. It also said that the bank records show that the parents of the deceased had actually paid the deposit, which he appeared to have paid back in 2013.