Two tax stages when a Korean clan sells and distributes land proceeds
Proceeds from an ancestral burial ground or clan-owned agricultural plot are not automatically the amount members can divide.
First account for the clan’s sale tax, transaction costs, debt repayment and cash reserved for ancestral rites and site maintenance.
Then review the separate tax consequences of gratuitous cash payments to members.
This calculator connects these stages and estimates the sale tax and net equal payment per member.
For clan officers and members receiving payments
Before the general meeting approves a sale or distribution, collect the bylaws, representative appointment, corporate-treatment approval, ownership records and acquisition evidence.
Verify whether the property belongs to the clan or to individuals as co-owners and how actual profit sharing affects its tax status.
The saved report supports a Korean tax consultation; it does not establish a final assessment, member entitlement or the validity of the distribution resolution.
This Korea-specific page uses Korean 2026 rules checked on 2026-10-05.
The initial inputs are a synthetic forest sale for KRW 1 billion with a KRW 100 million acquisition value.
The checked assumptions describe that example and are not verification of your clan’s records.
The English interface uses the same pure calculation function as the Korean page.
Why approval alone does not settle the tax status
Single-resident treatment
Income Tax Act Article 2(3) generally treats a domestic unincorporated association outside corporate treatment as one resident.
Confirmed member profit ratios or actual profit distributions can instead require member-level income taxation.
Article 2(4) also addresses cases where only part of the allocation is known.
Do not infer single-resident treatment solely from the absence of approval.
Association treated as a corporation
Framework Act on National Taxes Article 13 includes organization and operation rules, independent ownership and management, and a condition against distributing profits to members.
An approved association proposing member payments must review continued approval, cancellation and payment character.
Corporate rows estimate the sale-related tax increase under the verified status and filing assumptions.
The ordinary restriction covers the approval tax period through the tax period containing the date three years after that period ends.
It is not simply three years from the approval date, and cancellation after the conditions cease has an exception.
Attribution of a pre-approval sale to the first corporate year also requires separate review.
Final distribution results remain pending for unverified status, member-level taxation, an absent corporate approval date or a pre-approval sale.
The clan land exception for acquisition by 2005-12-31
Clan-owned farmland, forest and pasture acquired by 2005-12-31 may qualify for exclusions from non-business land treatment.
The individual CGT provisions are Income Tax Act Enforcement Decree Articles 168-8(3)(6), 168-9(3)(8) and 168-10(2)(2).
Corporate treatment requires a separate check under Corporate Tax Act Enforcement Decree Articles 92-5(3)(4), 92-6(4)(6) and 92-7(2)(1).
A date match is only a candidate
The cutoff includes 2005-12-31 and excludes 2006-01-01.
This category-specific exception does not cover building sites or other land.
Verify actual clan ownership, the acquisition event, the actual category on sale and all conditions, including farmland urban-area rules.
The farmland residence and cultivation exclusion does not automatically resolve the separate urban-area test.
The calculator applies the business-land assumption only after the all-conditions verification box is checked.
Failure to qualify for this exception does not automatically make the land non-business land.
Use the adjacent land-status calculator to review ordinary use and duration conditions, then enter separate verified individual and corporate classifications.
A grave on part of a parcel does not by itself establish direct statutory-purpose use of the whole parcel.
Long ownership alone is also insufficient to establish business-land treatment.
Separate acquisition value, book value and current cash costs
Transfer-method inputs
Sale proceeds are the price for the single parcel; acquisition value is the original value accepted for tax purposes.
A converted value must be accepted and verified by a tax adviser before entry.
This tool does not fetch official land values or calculate a conversion.
If another sale has used the annual capital gains allowance, enter only the remaining amount, capped here at KRW 2,500,000.
Corporate book value
Ordinary corporate tax uses a separately verified tax book value.
Do not assume it equals the transfer-method acquisition value without reviewing the books and pre-approval acquisition evidence.
Entering the verified corporate tax base excluding this sale measures the tax increase when this sale’s income is added.
Other adjustments, loss carryforwards and statutory-purpose reserves are not calculated automatically.
The sale-cost field assumes the amount is tax deductible and paid from the current proceeds.
Previously paid costs or amounts whose tax deduction differs from cash paid need a separate cash-and-tax model.
Enter distribution administration costs, debt repayment and reserves in their own fields to avoid double counting.
Money uses whole KRW with comma entry, while the distribution percentage accepts one decimal place.
Capital gains calculation for a single-resident clan
Gain → holding deduction → tax base → rate
Gain = max(0, sale proceeds − acquisition value − deductible sale costs)
Long-term holding deduction = gain × applicable percentage
Tax base = max(0, gain − holding deduction − remaining annual allowance)
Clan sale tax = national tax + local income tax
Registered land held for at least three completed years receives the ordinary 2% annual holding deduction, capped at 30%.
Basic progressive rates range from 6% to 45%, with thresholds of KRW 14 million, 50 million, 88 million, 150 million, 300 million, 500 million and 1 billion.
Non-business land adds 10 percentage points to basic rates and compares the applicable progressive result with short-holding rates of 50% below one year and 40% from one to below two years.
Business land held for a short period uses its applicable short-holding rate.
For designated-area non-business land under Income Tax Act Article 104(4), the additional weighted-rate candidate is also compared.
Non-business land with unverified designated-area treatment remains pending.
Local tax uses standard rates without relief, equivalent here to 10% of assessed national CGT; gift tax does not receive this local addition.
The display floors fractions of KRW in the planning assessment.
Review payment rounding to KRW 10, relief and aggregation with other sales separately.
Ordinary corporate tax and the Article 62-2 method
For a twelve-month business year beginning on or after 2026-01-01, ordinary nonprofit corporate rates are 10%, 20%, 22% and 25%.
Standard corporate local rates are 1%, 2%, 2.2% and 2.5%, with thresholds of KRW 200 million, 20 billion and 300 billion.
The ordinary row measures incremental tax on sale income after verified book value, deductible costs and excluded income.
It does not reuse the personal long-term holding deduction or KRW 2.5 million annual allowance.
Current three-year use versus cumulative ten-year use
Corporate Tax Act Article 4(3)(5) and Enforcement Decree Article 3(2)(1) address assets directly used continuously for statutory purposes for at least three years up to disposal.
Article 3(2)(2) addresses at least ten years of cumulative direct use, using direct-use days divided by holding days, including assets no longer used for those purposes at disposal.
Three cumulative years do not substitute for the current continuous-use condition.
The ten-year branch accepts tax-adviser-verified apportioned excluded income after entry-date market value and cost-allocation review; it does not infer that amount from years alone.
Nonprofit transfer-method filing
Article 62-2 applies to eligible nonprofit domestic corporations without Article 4(3)(1) business activity.
It uses the applicable transfer-method acquisition costs, holding deduction, annual allowance and rates to calculate corporate tax.
Existing or unverified qualifying business activity blocks this comparison, and combining partial ten-year exclusion with the special method requires separate assessment.
A smaller conditional tax figure does not establish a right to change tax status or elect the method.
Corporate additional tax for non-business land uses sale proceeds minus tax book value at 10% national and 1% local rates.
Deductible sale costs are not subtracted again from this additional-tax base.
For nonprofit land acquired by 1990-12-31, Article 55-2(6) permits electing the larger of book value and the statutory valuation as of 1991-01-01 for national additional tax.
Enter and confirm that valuation separately; the local additional tax under Local Tax Act Article 103-31(3) retains book value.
No valuation is estimated automatically, and an unverified valuation or ineligible acquisition date leaves the affected comparison pending.
Under Article 62-2, the additional-tax provisions can still apply when Article 104(4) weighting does not actually apply.
When that weighting actually applies, the Corporate Tax Act Article 55-2 and Local Tax Act Article 103-31 additional taxes are excluded.
Excluding income for direct statutory-purpose use does not automatically remove the separate land additional tax.
Distribution cash and member gift tax
Available cash = proceeds − sale costs − clan tax − debt repayment − reserve − administration costs
Distribution pool = max(0, available cash) × distribution percentage
Gross per member = pool ÷ member count, floored to whole KRW
Net plan per member = gross payment − incremental assessed tax on this payment
The historical acquisition payment is not subtracted again from current proceeds.
Whole-KRW division remainders stay with the clan alongside the entered reserve and undistributed cash.
A negative cash balance produces a disclosed shortfall and a zero distribution pool.
Distinguish a verified zero result from an unverified tax condition that keeps the result pending.
NTS ruling Written-2016-Inheritance/Gift-4201 dated 2016-07-15 addresses gratuitous distribution of clan property sale proceeds to members.
A clan is not an individual parent or other relative, so the family gift deduction in Inheritance and Gift Tax Act Article 53 is not applied.
For verified aggregate gifts from the same clan in the preceding ten years, the calculator shows the increase in assessed tax: tax on prior gifts plus this payment, less tax on prior gifts.
Gift rates are 10% up to KRW 100 million, 20% up to 500 million, 30% up to 1 billion, 40% up to 3 billion and 50% above that, using progressive offsets.
All members are assumed to have the same prior-gift amount; different histories need individual reviews.
Incremental assessed tax can differ from actual payable tax after prior-tax credits and the 3% filing credit.
For a payment verified as consideration or another income category, enter a separately verified per-member tax amount.
If its character is unknown, gross payments remain visible while tax and net payments remain pending.
Worked example: KRW 1 billion sale and twenty members
Assume forest acquired on 1990-10-05 is sold on 2026-10-05 for KRW 1,000,000,000.
Acquisition value is KRW 100,000,000, sale costs are zero, single-resident status and all clan exception conditions are verified, and KRW 2,500,000 of annual allowance remains.
Twenty members receive 100% of available cash, with no prior gifts, debt, reserve or administration costs.
These synthetic values are checked against the actual pure calculation function.
Synthetic Korean clan forest sale for KRW 1 billion and equal gratuitous payments to 20 members| Item | Amount (KRW) |
|---|
| Gain | 900,000,000 |
| Holding deduction 30% | 270,000,000 |
| CGT tax base | 627,500,000 |
| National CGT | 227,610,000 |
| Local CGT | 22,761,000 |
| Total clan sale tax | 250,371,000 |
| Available distribution cash | 749,629,000 |
| Gross per member | 37,481,450 |
| Incremental assessed gift tax per member | 3,748,145 |
| Net plan per member | 33,733,305 |
Equal gains can still produce different tax
With the same gain and 30% holding deduction, an acquisition on 2006-01-01 and verified non-business classification produces total national and local CGT of KRW 319,396,000.
Under verified corporate business-land assumptions, KRW 100 million book value, zero other base and no excluded income, ordinary tax is KRW 160,000,000 national and 16,000,000 local, totaling 176,000,000.
Corporate non-business land adds a separate KRW 99,000,000 based on book value.
Do not describe these conditional differences as an approved saving from changing the clan’s status.
Step-by-step review before the general meeting
- Review the approval, bylaws and actual profit sharing before selecting tax status.
Keep unverified status pending and send the records to the representative or tax adviser.
- Verify ownership, acquisition date, actual category and urban-area conditions before confirming the clan exception.
For other land, review individual and corporate classifications separately.
- Reconcile actual or accepted converted acquisition value, tax book value and sale costs.
Do not combine a building or multiple parcels into this single-parcel model.
- For corporate treatment, verify the year, business activity and direct-use history before comparing methods.
Separate current three-year use from cumulative ten-year apportionment.
- Enter debt, reserves, administration costs, distribution percentage and verified member count.
Review each member’s prior gifts and payment character before reading net planning amounts.
- Save the assumptions and results as TXT or print them for the meeting and tax consultation.
Actual filing, approval-status checks and completed transfers require confirmation by the user.
Practical uses and scope limits
Partial ancestral-land sale and cash planning
Before signing, estimate how tax and a common-management reserve affect each member’s payment.
Prepare specific questions about why individual and corporate tax differ.
Enter a distribution count already verified through proper procedures; the tool does not determine membership, entitlement or allocation fairness.
Compensation and special transactions
You may enter confirmed sale or compulsory-acquisition proceeds, but the tool does not determine compensation or apply public-acquisition or self-farming relief.
Unregistered transfers, buildings, other sale years, unequal allocations, clan-paid member tax and nonresident recipients are excluded.
Debt assumption, aggregation with other sales, reserves, loss carryforwards, VAT and special tax adjustments need separate review.
Verify the evidence permitting a method before focusing on the smallest number.
Where only part of a parcel is directly used for statutory purposes, obtain a tax assessment rather than applying the whole-parcel assumption.
If approval status or payment character is unclear, record the pending issues and conditional budget in meeting materials rather than presenting the displayed net amount as final.
Frequently asked questions
Is an unapproved clan always taxed as one resident?
No.
Income Tax Act Article 2(3) and (4) can require member-level taxation according to confirmed ratios or actual profit sharing.
Enter a status verified against the bylaws and payment records.
Is every clan parcel bought in 2005 business land?
Verify actual clan ownership, farmland/forest/pasture category, acquisition date and all exclusion conditions.
Farmland urban-area rules are separate, and building sites do not qualify for this category-specific exception.
Does any three-year statutory-purpose use exclude all income?
Separate continuous use up to disposal from ten-year cumulative apportionment.
Do not claim full exclusion from less than ten cumulative years when the current continuous three-year condition is absent.
Is Article 62-2 always cheaper than ordinary corporate tax?
It depends on holding duration, acquisition and book values, business activity, other tax base and additional land tax.
Verify eligibility first; combining partial ten-year exclusion requires a separate calculation.
Can a member claim the parental KRW 50 million deduction?
The clan is a payer distinct from an individual parent, so the family deduction is not included.
The gratuitous-gift assumption uses zero deduction; a different verified payment character uses separately confirmed tax.
Why can both the clan and the member owe tax?
The land sale by the clan and the gratuitous cash receipt by a member are separate taxable events.
Distributing proceeds after sale tax does not remove the gift-tax review.
Does the net plan equal the bank deposit?
A member can receive the gross cash and pay tax separately.
The display uses incremental assessed tax; filing credit, prior-tax credits, payment rounding and individual history require final-return review.
Can the clan pay the gift tax for the member?
Paying a member’s tax can create an additional gift.
This tool assumes members fund their own tax; clan-paid tax and its further gift calculation require a separate review.
Official sources, dates and next steps
The Ministry of Government Legislation OPEN API was queried directly to verify current statute identifiers, text and effective dates.
Framework Act on National Taxes MST289999 is effective 2026-10-02; Income Tax Act MST280405, Corporate Tax Act MST280349 and Local Tax Act MST282559 are effective 2026-07-01.
The income and corporate decrees MST290841 and 290843 are effective 2026-10-01; Inheritance and Gift Tax Act MST276123 is effective 2026-01-02.
The 2026 business-year rate application is distinguished from the whole-statute effective date; verification date is 2026-10-05.
- Framework Act on National Taxes Article 13 · association conditions and status-change restrictions
- Income Tax Act Articles 2,55,95,103,104 and 104-3 and Decree Articles 168-8 to 168-10 · status, capital gains and land
- Corporate Tax Act Articles 4,55,55-2 and 62-2 and Decree Articles 3 and 92-5 to 92-7 · exclusions and additional tax
- Inheritance and Gift Tax Act Articles 4,26,47,53,56,68 and 69 · gifts, aggregation, deductions and rates
- Local Tax Act Articles 103-3,103-20,103-31 and 103-32 · local rates and nonprofit transfer treatment
- NTS Written-2016-Inheritance/Gift-4201 · reply 00805,2016-07-15, gratuitous member distribution of clan sale proceeds
Save the assumptions and request a tax review
Take the report with bylaws, approval, acquisition and use evidence to your Korean tax adviser.
Ask about the remaining status, land classification and payment-character issues.
Confirm filing, continued approval and completed distribution transfers from actual records.
Continue with the non-business land calculator for land duration tests or the land compensation calculator for the compensation budget.