Prologue 004

PART 1.
Things to know when establishing a corporation

Q001 How are the types of companies classified under the Commercial Act?
Q002 What are the capital requirements, executive composition, and term of office for a joint-stock company?
Q003 What are the board's operating procedures and resolutions?
Q004 What are the procedures for convening a general shareholders' meeting and how are resolutions passed?
Q005 How do I handle regular insurance premiums for self-employed business owners? 022
Q006 Can the CEO's personal insurance policy be changed to the corporate name?
Q007 What is the appropriate rent for a CEO to lease real estate to a corporation?
Q008 What are the tax implications of goodwill conversion from a sole proprietorship to a corporation?
Q009 What is the Yellow Umbrella Insurance System?
Q010 What are the criteria for external audits of unlisted small and medium-sized enterprises?
Q011 What are the remedies for wrongly paid taxes? 037
Q012 What labor laws should CEOs know?
Q013: When starting a business, do taxes vary depending on where the business is located?
Q014 What are the requirements and benefits of establishing a research institute?
Q015: What are the requirements for becoming a venture company and what are the benefits of being certified?

PART 2.
Things to know when running a corporation

Q016 What is the In-House Employee Welfare Fund? 054
Q017 What is a compensation for job-related inventions?
Q018 What is accounts receivable insurance, a transaction safety net that eliminates the worry of payment delinquency? 063
Q019 What is business risk for a corporate CEO? 066
Q020 Can I claim expenses when signing up for corporate life insurance? 068
Q021 Can I claim expenses if I sign up for corporate term insurance? 072
Q022 Can I claim expenses for corporate insurance when the beneficiary is an employee? 079
Q023: Is interest income tax exempt when the policyholder or beneficiary of a corporate insurance contract changes?
Q024 Can survivor compensation paid by a corporation to the CEO's family be expensed?
Q025: Will the CEO's surviving family be subject to income tax when receiving survivor compensation?
Q026 Can tuition payments to beneficiaries of employees be considered expenses after their death?
Q027 What is the difference between treating paid insurance premiums as expenses or assets when receiving insurance benefits?
Q028: Is the company required to pay the insurance money received for an accident at work to the employee?
Q029 Are employers liable for damages in the event of an industrial accident involving an employee?
Q030 Can I designate a non-working spouse as the insured person when signing a corporate insurance contract?
Q031 Are directors or shareholders jointly liable for the corporation's debts?
Q032 What are the criteria for distinguishing between corporate officers and employees (workers)?
Q033 What is the scope of special related parties and their relatives when transacting with a corporation? 110
Q034 What happens when a corporation purchases stock from a related party at a low price?
Q035: What is the tax burden on the CEO based on the type of income he or she receives from the corporation?
Q036 How much are the monthly compensation and monthly income insurance premiums paid by CEOs?
Q037 What are the consequences if the CEO fails to repay the outstanding balance?
Q038 How are corporations' retained earnings typically stored?
Q039 Are there instances where corporations are required to submit a Certificate of Honest Reporting?
Q040: Is there a limit to the tax treatment of executive salaries as expenses?
Q041: If there are no payment regulations for executive bonuses, are they not recognized as expenses?
Q042 Can executive severance pay be paid by changing the policyholder and beneficiary of a corporate insurance policy?
Q043: How is the severance pay calculated when an executive severance pay is paid through a change in the policyholder and beneficiary after the commencement of the corporate pension insurance? 135
Q044 What are the conditions for legitimate executive severance pay payments that are treated as expenses under the Corporate Tax Act?
Q045: Is it impossible to pay more than double the executive severance pay multiplier under the 2020 tax law amendment?
Q046: Is it possible to receive an interim payment during employment rather than receiving the executive severance pay upon actual retirement?
Q047: Is it realistic to consider resignation as CEO and then serve as an advisor? 150
Q048: When establishing regulations for executive severance pay, is it possible to apply them differently to registered and unregistered executives? 152
Q049 How is severance pay calculated if the CEO has unpaid service periods? 154
Q050: When revising the regulations on executive severance pay through amendments to the Articles of Incorporation, can the revision be applied retroactively to the period of service prior to the revision? 156
Q051: Is it possible to retroactively recalculate severance pay from the date of employment after the interim settlement? 158
Q052: Can severance pay be repaid after an interim settlement? 161
Q053: What problems arise if an executive forgoes receiving severance pay? 164
Q054 How many retirement plan options does a company have? 166
Q055 What is the difference between retirement pensions and corporate insurance? 168
Q056: How do I calculate DB vs. DC retirement benefits when a CEO retires? 171
Q057 What are the types, timing, and methods of dividends? 174
Q058: If a corporation has two or fewer directors and a board of directors cannot be formed, how are interim dividends distributed? 177
Q059 In what cases is differential dividends, which are subject to both gift tax and income tax, advantageous?
Q060 Is it possible to receive dividends in kind through insurance securities? 183
Q061: Do I have to pay dividend income tax when paying dividends based on capital reserve reductions?

PART 3.
What you need to know about corporate liquidation and succession

Q062 How is the stock value of a corporation calculated? 196
Q063 What taxes must a corporation pay when liquidating? 198
Q064 What taxes must shareholders pay when a corporation is liquidated? 200
Q065: How much tax will a child have to pay when inheriting corporate stock? 203
Q066 What is stock burn? 206
Q067 What are the benefits of a capital reduction after a stock donation?
Q068 What are the benefits of capital reduction after inheriting stocks? 215
Q069: What are the benefits of the special tax exemption for business succession gift tax when giving corporate stock in advance?
Q070 What are the benefits of the business inheritance tax deduction when inheriting corporate stock? 226
Q071 What are the benefits of the special tax exemption for gift tax on startup funds?

PART 4.
Things to know about inheritance and gifts

Q072: What is a gift tax-saving strategy using differential dividends from specific corporations? 234
Q073: What is a gift tax-saving strategy using cash loans from specific corporations? 238
Q074: What is a gift tax-saving strategy using cash gifts to specific corporations? 242
Q075: Is it okay to sell gifted property within 10 years?
Q076: If I trade unlisted stocks at face value, will I have to pay gift tax? 249
Q077 What are tax-saving plans using a burden-bearing gift? 256
Q078: Do I have to pay gift tax when I purchase insurance with gifted property and receive the death benefit?
Q079 Can a creditor seize and force the cancellation of a guaranteed insurance policy? 264
Q080: How much of a pension gift to a disabled child is tax-exempt?
Q081 How is the market value of annuities (annual payments) assessed? 269
Q082: When changing the policyholder's name, what are the timing of the gift and the market value assessment? 274
Q083 Can I use whole life insurance to fund inheritance tax payments? 279
Q084 When should I submit my insurance payment statement to the National Tax Service?
Q085: If I renounce my inheritance, can my heir receive the life insurance death benefit?
Q086: What are the tax implications if I convert an insurance contract under another person's name to my real name?
Q087: Do I have to pay gift tax on financial transactions between direct descendants?
Q088: Is gift tax due when a direct descendant uses real estate without compensation? 292
Q089 What are the requirements and deduction amounts for the marriage and childbirth gift tax deduction? 295
Q090 What are the differences in inheritance and gift tax rates for residents and non-residents?
Q091: What is the gift tax if a mother pays inheritance tax on her child's share? 302
Q092: When divorcing a spouse, which is more advantageous: a division of property or alimony?
Q093: Are there any taxes imposed upon the redemption of trust shares?
Q094 Are living expenses, such as overseas study expenses, exempt from gift tax? 311
Q095: Which is more advantageous, a gift or an inheritance? 313
Q096 Can I deduct alimony payments as inheritance debt?
Q097 Are singers' fees included in the inheritance? 319
Q098: Should I inherit the right to a reserved portion? 322
Q099: Is a source of funds investigation conducted in every case?
Q100 How are tax audit subjects selected? 327
Q101 What is the Cash Transaction Reporting (CTR) system?
Q102: What types of tax schedules are useful for CEOs to know?

The book is organized into four parts as follows:

Part 1.
Things to know when establishing a corporation
Part 2.
Things to know when running a corporation
Part 3.
What you need to know about corporate liquidation and succession
Part 4.
Things to know about inheritance and gifts

Within each part, a total of 102 Q&A questions are presented in the form of CEO Najalna, tax accountant Najeolse, and FP Naildeung, to help you easily understand difficult tax topics through examples.
In addition, we have taken care to ensure reliability by adding National Tax Service regulations, Tax Tribunal precedents, related laws, and court precedents to the answers of tax accountants.
Although there is a lot of useful information within each part, I hope that this book will be helpful to CEOs, tax accountants, and FPs who are involved in corporate tax reduction consulting by providing an understanding of the establishment, operation, succession, and liquidation of a corporation and the inheritance and gift of the CEO through all parts.

The final Q&A, number 102, is about tax rates that CEOs should know.
If you want to know the tax bases and rates for various taxes while reading the book, it will be helpful to refer to the text.