(1) Where a domestic corporation (hereafter in this Article, referred to as "investing corporation") invests in kind, satisfying the following requirements, an amount equivalent to capital gains on the transfer of asset accruing from the investment in kind among the value of stocks of the domestic corporation acquired through investment in kind (hereafter in this Article, referred to as "invested corporation") may be included in deductible expenses for the purpose of calculating the amount of income for the business year in which the date of investment in kind falls, as prescribed by Presidential Decree; provided, the domestic corporation may include an amount equivalent to capital gains on the transfer of asset in deductible expenses, as prescribed by Presidential Decree, in extenuating circumstances prescribed by Presidential Decree, although it fails to satisfy the requirements prescribed in subparagraph 2 or 4: <Amended on Dec. 31, 2011; Dec. 15, 2015; Dec. 19, 2017; Dec. 24, 2018>
1. The investing corporation that has operated business for at least five consecutive years as on the date of investment in kind;
2. The invested corporation shall continuously operate the business that the investing corporation operated with assets invested in kind, until the end of the business year in which such investment in kind is made;
3. Where a person makes a joint investment with another Korean or foreigner, the person shall not be a related party to the investing corporation;
4. The investing corporation and a person who makes a joint investment with the investing corporation as prescribed in subparagraph 3 (hereafter in this Article, referred to as "investing corporation, etc.") holds at least 80/100 of the total number of issued stocks or the total investment amount of the invested corporation as on the date following the date of investment in kind and hold such stocks, etc., until the end of the business year in which the date of investment in kind falls;
5. Deleted. <Dec. 19, 2017>
(2) An amount equivalent to capital gains on a transfer that an investing corporation has included in deductible expenses pursuant to paragraph (1) shall be included in gross income as much as the amount prescribed by Presidential Decree, in consideration of the ratio of disposition of the relevant stocks, etc., and assets for the business year in which any of the following events occurs; provided, the foregoing shall not apply where an invested corporation becomes subject to a qualified merger or qualified division, or where such corporation is in other extenuating circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Jan. 1, 2013>
1. Where an investing corporation disposes of stocks, etc., received from an invested corporation;
2. Where an invested corporation disposes of assets prescribed by Presidential Decree and succeeded to from an investing corporation, etc. In such cases, the invested corporation shall inform the investing corporation of the disposition of such assets within one month from the date of the disposition.
(3) Where either of the following events occurs, the investing corporation that has included an amount equivalent to capital gains on a transfer in deductible expenses pursuant to paragraph (1) shall include any remainder after including an amount in gross income pursuant to paragraph (2), among the amount included in deductible expenses pursuant to paragraph (1), in gross income within the period prescribed by Presidential Decree, which shall not exceed three years, when calculating the amount of income for the business year in which the relevant event occurs; provided, the same shall not apply in extenuating circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 19, 2017>
1. Where an invested corporation discontinues the business that the investing corporation has operated with assets invested in kind;
2. Where an investing corporation, etc., holds less than 50/100 of the total number of outstanding stocks or the total investment amount of an invested corporation.
(4) The calculation of capital gains on a transfer to be included in deductible expenses, the criteria for determining the continuation or discontinuation of the business that an investing corporation has operated with assets invested in kind, the method for calculating the amount to be included in gross income and the method for including such amount and the submission of statements of investment in kind under paragraphs (1) through (3), and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 15, 2015; Dec. 19, 2017>[This Article Wholly Amended on Dec. 30, 2010]