ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

Physical division, Deferred taxation, Assets adjustment accounts, Acquisition cost

  • Chun-Woong Kim Gagyo Tax Corporation
  • Kim Won Bae Gachon University

Asian Tax Journal Vol. 12 No. 2 (2011), pp. 317-349

Abstract

In this study, we examine the cases to find the problems in the process and execution of the interpretation of current law which is ruling the taxation system about the physical division and investigate the reason for the difference of the accounting selection, the difference between qualified division and nonqualified division, and the problem of tax adjustment and so on and suggest the reformation. As the result of this study, the reformation is as in the following. First, in the fourth edition, Clause 2, Article 72 of corporate taxation law enforcement ordinance, it is desirable that the contents, “In the case of inclusion adding the exclusion of transfer margin, the price like stocks getting as the physical division is the book amount of assets transferred by the divided corporation,” should be deleted. Second, it is desirable that the contents, “In the case of getting the stocks as 100% relevant the cost of the price of net assets of divided corporation from the physical division,” should be added. Third, it is desirable that the difference between the original cost of net assets in the accounting of the divided newly-established corporation and the book amount of the divided corporation should be recorded the capital and reserve report and managed after the tax adjustment, and if there is the need to separated the assets, it is desirable that the capital and the reserve report should be recorded as progressive schedule and the asset modification account list separated by the assets. Fourth, following the reason of the divided corporation is relevant the regular requirement, the reserve fund of compressed register is getting the inclusion in gross revenue if at all, it is desirable that the difference between the market price and the book amount until the asset transfer of the divided corporation. Fifth, to resolve the current problem of the double taxation keeping the current taxation postponement method, it must be deleted the regulation of Clause 2, Article 47, and the regulation of Article 3 must be reformed the reserve fund of compressed register of the divided corporation.

Keywords

  • Physical division
  • Deferred taxation
  • Assets adjustment accounts
  • Acquisition cost

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