Article 163 (Necessary Expenses for Transferred Assets)

The actual transaction price incurred for acquisition under Article 97 (1) 1 (a) of the Act shall be the sum of the amounts listed in the following subparagraphs. <Amended by Act No. 10046, Dec. 31, 1996, Act No. 10747, Dec. 31, 2005, Act No. 11643, Feb. 18, 2010, Act No. 11668, Feb. 2, 2012, Act No. 12366, Feb. 3, 2015, Act No. 13173, Feb. 3, 2017, Act No. 13207, Feb. 13, 2018, Act No. 14078, Feb. 11, 2020, Act No. 15275, Feb. 27, 2026> 1. The acquisition cost calculated by applying Articles 89 (1) and (3) (including the discount on present value under Article 89 (2) 1 and the value added tax paid or to be paid pursuant to Article 10 (1) and (6) of the Value Added Tax Act, but excluding the amount exceeding the fair market price due to unfair transactions). 2. The amount of legal costs, settlement costs, etc., directly incurred to secure ownership of assets for which disputes exist regarding acquisition, excluding amounts that have been included as necessary expenses in the calculation of each income amount for the year of expenditure. 3. When applying subparagraph 1, if the transaction price is determined by adding interest equivalent to the acquisition cost according to the payment method agreed upon by the parties, the interest equivalent shall be included in the acquisition cost. Provided, that the interest equivalent that subsequently accrues due to the delay in the payment date of the transaction price according to the initial agreement shall not be included in the acquisition cost. 4. When applying subparagraph 1, the acquisition cost per share of shares received by a shareholder of a company that has merged and ceased to exist from the surviving or newly established company after the merger (hereinafter referred to as the "merging company" in this subparagraph) shall be calculated by dividing the total amount incurred to acquire the shares of the merged company held by the shareholder at the time of the merger (including the amount under Article 16 (1) 5 of the Corporate Tax Act, but excluding the sum of money and other asset values of the merger consideration under the same subparagraph) by the number of shares received due to the merger. 5. When applying subparagraph 1, the acquisition cost per share of shares acquired by a shareholder of a splitting company or the counterparty company of a split merger that has ceased to exist from the newly established splitting company or the counterparty company of the split merger due to the split or split merger shall be calculated by dividing the total amount incurred to acquire the shares of the splitting company or the counterparty company of the split merger that the shareholder held at the time of the split or split merger (including the amount under Article 16 (1) 6 of the Corporate Tax Act, but excluding the sum of money and other asset values of the split consideration under the same subparagraph) by the number of shares acquired due to the split.

The "capital expenditures, etc., as prescribed by Presidential Decree" referred to in Article 97 (1) 2 of the Act means those falling under any of the following subparagraphs, for which supporting documents under Article 160 (2) of the Act have been obtained and retained, or for which the actual expenditure has been confirmed by financial transaction documents. <Amended by Act No. 10570, Dec. 29, 2000, Act No. 11047, Sep. 22, 2006, Act No. 11643, Feb. 18, 2010, Act No. 12366, Feb. 3, 2015, Act No. 12931, Feb. 17, 2016, Act No. 13207, Feb. 13, 2018, Act No. 14078, Feb. 11, 2020, Act No. 15275, Dec. 30, 2025> 1. Capital expenditures calculated by applying Article 67 (2). 2. The amount of legal costs, settlement costs, etc., directly incurred to secure ownership in case of a dispute after acquiring the transferred asset, excluding amounts that have been included as necessary expenses in the calculation of each income amount for the year of expenditure. 2. The amount of legal costs, settlement costs, etc., directly incurred in relation to an increase in compensation when land, etc., is negotiated for purchase or expropriated under the 「Act on the Acquisition and Compensation of Land, etc., for Public Works Projects」 or other laws, excluding amounts that have been included as necessary expenses in the calculation of each income amount for the year of expenditure. In this case, it shall be limited to the amount of the increased compensation. 3. Expenses incurred for the change of use, improvement, or convenience of use of the transferred asset (including demolition costs when rebuilding a building due to unavoidable reasons such as disaster or aging). 3. Development contributions under the 「Act on the Collection of Development Gains」 (in cases where the person liable for the development contribution and the transferor are different, it refers to the amount of the development contribution effectively allocated to the transferor). 3. Reconstruction surcharges under the 「Act on the Collection of Reconstruction Surpluses」 (in cases where the person liable for the reconstruction surcharge and the transferor are different, it refers to the amount of the reconstruction surcharge effectively allocated to the transferor). 4. Expenses equivalent to subparagraphs 1 through 3, 3. and 3. as prescribed by the Minister of Finance and Economy.

"As prescribed by Presidential Decree" in Article 97 (1) 3 of the Act means those falling under any of the following subparagraphs, for which supporting documents under Article 160 (2) of the Act have been obtained and retained, or for which the actual expenditure has been confirmed by financial transaction documents. <Amended by Act No. 9813, Apr. 1, 1998, Act No. 10570, Dec. 29, 2000, Act No. 12366, Feb. 3, 2015, Act No. 13207, Feb. 13, 2018, Act No. 15275, Dec. 30, 2025> 1. Expenses directly incurred to transfer assets under each subparagraph of Article 94 (1) of the Act, including the following: (a) Securities transaction tax paid under the 「Securities Transaction Tax Act」. (b) Expenses for preparing the tax base report for capital gains tax and expenses for preparing contracts. (c) Notarization fees, stamp fees, and brokerage fees. (d) Eviction costs incurred by the transferor to fulfill the obligation of delivery according to the sales contract. (e) Costs similar to those in items (a) through (d) as prescribed by the Minister of Finance and Economy. 2. Capital losses incurred from the sale before maturity of national housing bonds and land development bonds purchased in accordance with laws and regulations when acquiring assets under Article 94 (1) 1 of the Act. In this case, if sold to a party other than a financial institution prescribed by the Minister of Finance and Economy (hereinafter referred to as "financial institution" in this subparagraph), the capital loss shall be limited to the capital loss that would have occurred if sold to a financial institution on the same day.

Deleted <Feb. 21, 2014>

When applying Article 97 (1) 1 (a) of the Act to assets acquired by inheritance or gift (including the portion equivalent to the debt amount of a burden-assumed gift under the latter part of Article 88 (1) of the Act, but excluding gifts under Articles 34 through 39, 39-2, 39-3, 40, 41-2 through 41-5, 42, 42-2, and 42-3 of the 「Inheritance and Gift Tax Act」), the value assessed under Articles 60 through 66 of the 「Inheritance and Gift Tax Act」 as of the date of inheritance or gift (or the value determined or adjusted by the tax office chief, etc., under Article 76 of the same Act, if any) shall be deemed the actual transaction price at the time of acquisition. Provided, that in cases falling under any of the following subparagraphs, the amount calculated according to the classification of each subparagraph shall apply. <Newly inserted by Act No. 10080, Dec. 31, 1999, Act No. 10570, Dec. 29, 2000, Act No. 11643, Feb. 18, 2010, Act No. 12366, Feb. 3, 2015, Act No. 12931, Feb. 17, 2016, Act No. 13173, Feb. 3, 2017, Act No. 14078, Feb. 11, 2020, Act No. 14782, Feb. 17, 2021> 1. For land inherited or gifted before the official announcement of the officially announced price of public land for each district on August 30, 1990, under the 「Act on the Disclosure of Real Estate Prices」, the greater of the value assessed under Articles 60 through 66 of the 「Inheritance and Gift Tax Act」 as of the date of inheritance or gift and the value under Article 164 (4). 2. For buildings inherited or gifted before the standard market price of buildings under Articles 61 (1) 2 through 4 of the 「Inheritance and Gift Tax Act」 was announced, the greater of the value assessed under Articles 60 through 66 of the 「Inheritance and Gift Tax Act」 as of the date of inheritance or gift and the values under Articles 164 (5) through (7).

"The method prescribed by Presidential Decree" in Article 97 (7) of the Act refers to the methods falling under any of the following subparagraphs. <Amended by Act No. 11643, Feb. 18, 2010, Act No. 12931, Feb. 17, 2016, Act No. 13173, Feb. 3, 2017, Act No. 15275, Dec. 30, 2025> 1. Deleted <Dec. 31, 2009> 2. A method by which a resident confirms the actual transaction price of real estate under Article 3 (1) of the 「Act on Reporting Real Estate Transactions, etc.」 (hereinafter referred to as "actual transaction price" in this subparagraph) by a method prescribed by the Minister of Finance and Economy. Provided, that this shall apply only when the actual transaction price is the same as the transfer price at the time of presumptive reporting or final reporting of the former owner's capital gains tax base.

When transferring shares acquired by exercising a stock option, the market price at the time of exercising the stock option shall be the acquisition cost under Article 97 (1) 1 of the Act. <Newly inserted by Act No. 10570, Dec. 29, 2000>