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Corporate Tax

home Local Compliance InformationCorporate Tax
Subject
Stock acquisition price calculation
Writer
Manager
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663
Date
2018-07-11
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Written by: Hyunbae Moon

Translated by: Jooyeon Han

 

1.Income Tax Law

 


(1) Principal: Amount spent to acquire (ifunclear, face value is applied) (Law No. 97)


Amount spent to acquire refers to the sum of the following amounts:
① The amount equivalent to the acquisition cost calculated by applying theprovisions of Article 89 (1) (including the discounted present value, but not exceedingthe market price attributed by calculating the unfair act)

 

Costs directly incurred in order to secure ownership of assets forwhich there is a dispute regarding acquisition, etc. Therefore, whencalculating the income amount necessary expenses are included.

 

③ If thetransaction value is determined by adding the amount equivalent to the acquisitioncost to the acquisition cost, in accordance with the payment method accordingto the agreement of the parties, the interest equivalent shall be included inthe acquisition cost. However, the additional interest accrued due to the delayin the payment date due to the original agreement is not included in theacquisition cost

 

(2)Bonus Stock Amount: The bonus stock amount taxed by fictitious dividend isadded to acquisition price

(3)Bonus Stock Amount not taxed due to fictitious dividend: The amount is notadded to acquisition price and the book value per share after acquiring bonusstock is calculated as below.

BookValue per share = Book Value per share of existing share/(1+ the number ofnewly issued share per existing share)



 

(4) Exceptionof short-term stock retirement

In the calculation of the fictitious dividendby the stock retirement, in case there is the amount not accrued by fictitiousdividend (bonus share of paid-up capital of per value is not included), bonusshare is deemed to be retired beforehand, and stock acquisition amount of thatyear shall be 0(zero).

 

 

(5)Transferfictitious by first-in-first-out



 

In determiningthe timing of the acquisition of unlisted shares, if the acquisition date ofthe unlisted stocks transferred is not clear, the asset acquired first isconsidered to have been transferred first (Article 162 ⑤).


If theacquisition date of the transferred asset is different in determining theacquisition date of the transferred asset in accordance with the Income TaxAct, the acquisition date is the date when the acquisition date can beconfirmed by the issuance number of the transferred stock, etc., If theacquisition date of the asset is not clear, it is considered that the prior acquiredassets are transferred first. (Property 46014-1940)


 

 

2.Corporate tax law

(1) Paid acquisition: purchase price


(2) Bonusshare taxed by fictitious dividend: Fictitious dividend is added to theacquisition price.


(3)Bonus Stock Amount not taxed due to fictitious dividend: The amount is notadded to acquisition price and the book value per share after acquiring bonusstock is calculated as below.

BookValue per share = Book Value per share of before acquiring bonus share /(1+ thenumber of bonus share issued per existing share)

(4) Evaluationof Stock






① Generalcompanies which reported valuation method: The method shall be based on thetotal average method or the moving average method.


② Generalcompanies which did not reported evaluation method: We evaluate stock by totalaverage method.


③ Generalcompanies that arbitrarilychanged evaluation method  : Max (totalaverage method, declared evaluation method)


④Investment company: Evaluated by market value method regardless of whether ornot it is declared.


 









 


 




 


 

 

 


 

 

 

 




 


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