Koo Bon-jun, chairman of the LX Group (LX Holdings), canceled the gift of LG shares to his son Koo Hyung-mo, president of LX MDI, twice before proceeding with the gift again, saving nearly 10 billion won in gift tax.
According to the Financial Supervisory Service's electronic disclosure system (DART) on the 26th, Koo decided to give 1,573,000 LG shares to Koo on March 25 but canceled it, only to gift them again the next day. The gift tax on listed shares is based on the average closing price over two months prior to and after the gift date. The lower the stock price, the lower the gift tax, suggesting that Koo expected LG's stock price to decline further.
Koo's forecast proved correct. LG's stock price fell from a closing price of 67,500 won on March 25 to a closing price of 58,500 won on April 9 due to the tariff shock from U.S. President Donald Trump. However, supported by the tariff deferment and trade negotiations with China, LG's stock price recovered to a closing price of 67,500 won on the 23rd of this month.
The average closing price of LG shares around March 26, the date Koo re-gifted after the cancellation, is 67,242 won. This is a 15.4% (12,248 won) decrease compared to the average closing price of LG shares of 79,490 won two months around September 23, when Koo first decided on the gift. It also dropped by about 9.8% (7,290 won) compared to the average closing price of 74,532 won two months around December 18, when Koo first re-gifted after canceling the gift.
As a result, the burden of the gift tax has also decreased. When Koo first intended to gift 1,573,000 LG shares, the reference value was about 125 billion won. After two cancellations and the subsequent re-gift, it became 105.8 billion won. If the highest gift tax rate (50%) is simply applied, the burden of the gift tax has decreased by 9.6 billion won.
Whether Koo will cancel the gift again and re-gift remains uncertain. The average target price for LG shares suggested by securities firms is currently 86,250 won. Before the cancellation of the gift in March, the average target price was 89,700 won.