Article 32 (Carryover Taxation of Capital Gains Tax on Corporate Conversion)

When a resident converts a business into a corporation (excluding a corporation engaged in consumption service business prescribed by Presidential Decree) by contributing business fixed assets in kind or by transferring and acquiring the business in a manner prescribed by Presidential Decree, carryover taxation may be applied to such business fixed assets. However, this shall not apply to cases where the business fixed assets are housing or rights to acquire housing. <Amended by Act No. 11612, Jan. 1, 2013; Act No. 17842, Dec. 29, 2020>

A resident who intends to apply paragraph ① shall apply for carryover taxation in accordance with Presidential Decree.

If any of the following occurs within 5 years from the date of registration of establishment of a corporation established in accordance with paragraph ①, the resident who received the application of paragraph ① shall pay the capital gains tax on the carryover taxation amount under paragraph ① (referring to the amount excluding the tax already paid by the corporation) within 2 months from the last day of the month in which the cause occurred. In this case, matters necessary for the criteria for determining business discontinuation, etc. shall be prescribed by Presidential Decree. <Amended by Act No. 11612, Jan. 1, 2013; Act No. 12156, Dec. 23, 2014; Act No. 15221, Dec. 19, 2017> 1. When the corporation established in accordance with paragraph ① discontinues the business inherited from the resident who received the application of paragraph ①. 2. When the resident who received the application of paragraph ① disposes of 50 percent or more of the shares or equity obtained through corporate conversion.