(1) Necessary expenses that a resident may deduct from the sale price when the resident calculates the gain on the transfer of an asset acquired as gift from his/her spouse (including where the marital relationship ceases to exist as at the time of transfer, but excluding where the marital relationship ceases to exist due to death; hereafter the same shall apply in this paragraph) or from any of his/her lineal ascendants or descendants under Article 94 (1) 1 or of any other asset specified by Presidential Decree, within 10 years retroactively from the date of transfer, shall be determined in accordance with Article 97 (2), but the acquisition value shall be determined with the amount under Article 97 (1) 1 as at the time the spouse or lineal ascendant or descendant acquired the asset. In such cases, the amount equivalent to the gift tax that the resident paid or shall pay for the asset acquired as gift shall be included in necessary expenses, notwithstanding Article 97 (2). <Amended by Act No. 15225, Dec. 19, 2017; Dec. 31, 2022>
(2) Paragraph (1) shall not apply to the following cases: <Amended by Act No. 12852, Dec. 23, 2014; Act No. 13558, Dec. 15, 2015; Act No. 14389, Dec. 20, 2016>
1. Where a resident acquires an asset at least two years earlier than the date of public announcement of the approval of the relevant project, but the asset is sold under an agreement or expropriated under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects or any other Act;
2. Where a case constitutes a transfer of a house specified in any item of Article 89 (1) 3 (including high-priced houses ineligible for non-taxation on capital gains under the same subparagraph (including land appurtenant thereto)), if paragraph (1) applies to such case;
3. Where the final capital gains tax calculated by applying paragraph (1) is smaller than the final capital gains tax calculated without applying paragraph (1).
(3) The number of years prescribed in paragraph (1) shall be determined with the period of ownership recorded on the register.
(4) Necessary expenses that may be deducted from the sale price of an asset in calculating the gain on the transfer of an asset to which the deduction under Article 18-2 (1) of the Inheritance Tax and Gift Tax Act (hereafter referred to as "deduction for inheritance of a family business" in this paragraph) was applied shall be determined in accordance with Article 97 (2): Provided, That the acquisition value shall be calculated by aggregating the following amounts: <Amended by Act No. 15225, Dec. 19, 2017; Dec. 31, 2022>
1. The deceased's acquisition value (the amount under Article 97 (1) 1) x Ratio of the deduction for inheritance of a family business to the relevant asset value (hereafter referred to as "ratio of deduction for inheritance of a family business" in this Article);
2. Asset value at the beginning of inheritance x (1 - Ratio of deduction for inheritance of a family business).
(5) Matters necessary for calculating necessary expenses in applying paragraphs (1) through (4), such as the methods of calculating the amount equivalent to the gift tax and the ratio of deduction for inheritance of a family business, shall be prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 12169, Jan. 1, 2014]