When a person acquires stocks for free or transfers stocks for value, he or she must pay a tax. Namely, when a person obtains stocks for free by succession or donation, an inheritance tax or a donation tax will be imposed. In addition, when a stockholder or an employee transfers stocks for value, a transfer income tax (or the corporation tax) and a stock exchange tax will be imposed for capital gains and a transfer price, respectively. However, in order to impose such taxes as an inheritance tax, a donation tax, a corporation tax, a transfer income tax or a stock exchange tax, it is necessary to establish a standard of assessment based upon an evaluation of stocks or transfer prices. Especially, in case of donation or succession for stocks (for free), there is no a transfer price exists. Despite of the improvement of the law, the evaluation of unlisted stocks system still has some of critical limitations. A substantial body of empirical studies, for example, confirms that the current system for the evaluation of the stocks usually underestimates or overestimates the market price because the current system does not take into consideration of other possible factors. Unlike the Korean system, many foreign countries adopt a multidimensional evaluation system for unlisted stocks which incorporate other factors like a premium or a discount to assess the value of unlisted stocks. Therefore, the primary purpose of the current study is to review the current evaluation system in South Korea, to identify problems associated to the current system compared to other countries, and to suggest a detail policy for improvement of the evaluation system for unlisted stocks.

When a person acquires stocks for free or transfers stocks for value, he or she must pay a tax. Namely, when a person obtains stocks for free by succession or donation, an inheritance tax or a donation tax will be imposed. In addition, when a stockholder or an employee transfers stocks for value, a transfer income tax (or the corporation tax) and a stock exchange tax will be imposed for capital gains and a transfer price, respectively. However, in order to impose such taxes as an inheritance tax, a donation tax, a corporation tax, a transfer income tax or a stock exchange tax, it is necessary to establish a standard of assessment based upon an evaluation of stocks or transfer prices. Especially, in case of donation or succession for stocks (for free), there is no a transfer price exists. Despite of the improvement of the law, the evaluation of unlisted stocks system still has some of critical limitations. A substantial body of empirical studies, for example, confirms that the current system for the evaluation of the stocks usually underestimates or overestimates the market price because the current system does not take into consideration of other possible factors. Unlike the Korean system, many foreign countries adopt a multidimensional evaluation system for unlisted stocks which incorporate other factors like a premium or a discount to assess the value of unlisted stocks. Therefore, the primary purpose of the current study is to review the current evaluation system in South Korea, to identify problems associated to the current system compared to other countries, and to suggest a detail policy for improvement of the evaluation system for unlisted stocks.

business succession, inheritance tax, donation tax, income tax, unlisted stocks