Article 23(1)The portion of the following amount that a domestic corporation receives (excluding the amount listed in item (i) that a domestic corporation receives from a foreign corporation, corporation in the public interest, etc. or an association or foundation without juridical personality; hereinafter referred to as the "amount of dividends, etc." in this Article), which is equivalent to 50 percent of the amount of dividends, etc. pertaining to the shares, etc. (meaning shares, capital contributions, or beneficial rights; hereinafter the same applies in this Article) that fall under neither of the shares, etc. of a consolidated corporation (meaning the shares or capital contributions of a consolidated corporation that are specified by Cabinet Order; hereinafter the same applies in this Article) nor the shares, etc. of an affiliated corporation, and the amount of dividends, etc. pertaining to the shares, etc. of an affiliated corporation is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year:

(2)The amount of dividends, etc. pertaining to shares, etc. of a consolidated corporation, out of the amount of dividends, etc. that a domestic corporation receives, is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

(3)In the case where a domestic corporation acquired shares, etc., which are the principal for the amount of dividends, etc. receivable (excluding the amount deemed to be the amount of dividends, etc. that the domestic corporation is to receive pursuant to the provisions of paragraph (1) of the following Article; hereinafter the same applies in this paragraph), within one month prior to the base date for the payment of the amount of dividends, etc. (in the case of the distribution of proceeds from a trust, prior to the final day of the period that was used as the basis of the calculation) and then transferred the shares, etc. or other shares, etc. of the same issue within two months after the base date, the provisions of the preceding two paragraphs do not apply to the amount of dividends, etc. of the portion of the shares, etc. that is specified by Cabinet Order.

(4)In the case referred to in paragraph (1), when there is any interest on liabilities that the domestic corporation set forth in the paragraph is to pay in the business year (such interest includes what is specified by Cabinet Order as being equivalent thereto and exclude what is to be paid to a consolidated corporation that has a consolidated full controlling interest in the domestic corporation), the amount to be excluded from gross profits, when calculating the amount of income for that business year, pursuant to the provisions of the paragraph, is to be the sum of the amounts listed as follows:

(5)The shares, etc. of an affiliated corporation prescribed in paragraph (1) and the preceding paragraph mean the shares or capital contributions (excluding the shares, etc. of a consolidated corporation) of another domestic corporation in the case specified by Cabinet Order as a case where a domestic corporation holds shares or capital contributions equivalent to 25 percent or more of the total number or total amount of issued shares or capital contributions of another domestic corporation (excluding a corporation in the public interest, etc. and an association or foundation without juridical personality) (such issued shares or capital contributions exclude shares that the second domestic corporation holds in itself and capital contributions it has made).

(6)The provisions of paragraph (1) and paragraph (2) apply only in the case where a tax return contains the amount of dividends, etc. that is to be excluded from gross profits and a detailed statement concerning the calculation thereof. In this case, the amount to be excluded from gross profits pursuant to these provisions does not exceed such recorded amount.

(7)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph, with regard to the whole or a part of the amount to be excluded from gross profits pursuant to the provisions of paragraph (1) and paragraph (2), has been filed, the district director of the tax office may apply the provisions of paragraph (1) and paragraph (2), when they find any unavoidable grounds for the person's failure to make entries for such matters.

(8)Necessary matters concerning the application of the provisions of paragraphs (1) through (3) and the provisions of paragraphs (1) through (5) in the case where the shares, etc. have been transferred as a result of a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution are specified by Cabinet Order.

Article 24(1)In the case where a domestic corporation that is a shareholder, etc. of a corporation (excluding corporations in the public interest, etc. and an association or foundation without juridical personality; hereinafter the same applies in this Article) has received a delivery of monies or other assets on any of the following grounds concerning the corporation, when the sum of the amount of the monies and the value of the assets other than monies exceeds the portion of the corporation's stated capital, etc. or consolidated individual stated capital, etc. that corresponds to the corporation's shares or capital contributions that were basic causes of the delivery, with regard to the application of the provisions of this Act, the amount of the excess is deemed to be the amount listed in Article 23, paragraph (1), item (i):

(2)Even in the case where an acquiring corporation had not allotted shares or delivered assets other than the shares as a result of the merger for tie-in shares (meaning the acquired corporation's shares (including capital contributions; hereinafter the same applies in this paragraph) that the acquiring corporation held as of immediately prior to the merger shares of a second acquired corporation that the first acquired corporation held as of immediately prior to the merger), the provisions of the preceding paragraph apply by deeming that the acquiring corporation has received the allotment of shares, etc. (meaning the allotment of the shares or delivery of the assets as a result of the merger) as specified by Cabinet Order.

(3)Necessary matters concerning the method of calculating the amount of the portion corresponding to the shares or capital contributions prescribed in paragraph (1) and the application of the provisions of the preceding two paragraphs are specified by Cabinet Order.

Article 25(1)In the case where a domestic corporation has revaluated its assets to increase their book value, the amount of the increase is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

(2)In the case where an order on the confirmation of a reorganization plan has been rendered for a domestic corporation under the Corporate Reorganization Act (Act No. 154 of 2002) or the Act on Special Measures, etc. of Reorganization Procedure of Financial Institutions and the domestic corporation has revaluated its assets as specified in these Acts or has revaluated its assets otherwise as specified in Cabinet Order to increase their book value, the amount of the increase is included in gross profits, when calculating the amount of income for the business year containing the date of the revaluation, notwithstanding the provisions of the preceding paragraph.

(3)In the case where an order on the confirmation of a rehabilitation plan has been rendered for a domestic corporation under the Civil Rehabilitation Act (Act No. 225 of 1999) or any equivalent event as specified by Cabinet Order has occurred, when the domestic corporation evaluates the value of its assets as specified by Cabinet Order, the amount specified by Cabinet Order as a valuation gain on the assets (excluding those specified by Cabinet Order) is included in gross profits, when calculating the amount of income for the business year containing the date of any of such events, notwithstanding the provisions of paragraph (1).

(4)In the case where the provisions of paragraph (1) were applied, with regard to the assets whose increased value due to revaluation was not included in gross profits, it is deemed that the book value of the assets has not increased, when calculating the amount of income for each business year after the business year containing the date of the revaluation.

(5)The provisions of paragraph (3) apply only in the case where a tax return contains a detailed statement concerning the inclusion in gross profits of the amount specified by Cabinet Order as the amount of the valuation gain prescribed in the paragraph (referred to as a "detailed statement of the valuation gain" in the following paragraph) and is attached with documents specified by Ordinance of the Ministry of Finance (referred to as "valuation gain-related documents" in the following paragraph) (when with regard to the assets prescribed in Article 33, paragraph (3) (Exclusion of Asset Valuation Losses, etc. from Deductible Expenses), there is any amount specified by Cabinet Order as the amount of valuation loss prescribed in the paragraph (such case is referred to as the "case where there is any valuation loss" in the following paragraph), only in the case where a tax return contains a detailed statement of the valuation loss prescribed in paragraph (5) of the Article (referred to as a "detailed statement of the valuation loss" in the following paragraph) and the valuation loss-related documents prescribed in paragraph (5) of the Article (referred to as "valuation loss-related documents" in the following paragraph)).

(6)Even in the case where a tax return has been filed without a detailed statement of the valuation gain (in the case where there is any valuation loss, without a detailed statement of the valuation gain or a detailed statement of the valuation loss) or without valuation gain-related documents (in the case where there is any valuation loss, without valuation gain-related documents or valuation loss-related documents), the district director of the tax office may apply the provisions of paragraph (3), when they find any unavoidable grounds for the person's failure to make entries of such a statement or to attach such documents.

(7)Beyond what is provided for in the preceding three paragraphs, necessary matters concerning the application of the provisions of paragraphs (1) through (3) are specified by Cabinet Order.

Article 26(1)In the case where a domestic corporation receives a refund of the following amount or the amount to be refunded is to be appropriated for the unpaid national tax or local tax, the amount to be refunded or to be appropriated is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year:

(2)In the case where in each business year after the business year when a domestic corporation was subject to the provisions of Article 69, paragraphs (1) through (3) (Foreign Tax Credit), the amount of a foreign country's corporate tax (meaning the amount of a foreign country's corporate tax prescribed in Article 69, paragraph (1); hereinafter the same applies in this paragraph) that was used as the basis of the calculation of the amount to be credited under these provisions has been reduced (when the domestic corporation has received the transfer of the whole or a part of the business from an acquired corporation, etc. as prescribed in paragraph (5) of the Article as a result of a qualified organizational restructuring as prescribed in the paragraph, including the case where a reduction has been made on the portion of the foreign country's corporate tax to be paid by the acquired corporation, etc. that the domestic corporation is to pay for the income arising from the transferred business; hereinafter the same applies in this paragraph), or in the case where in each business year after the business year when the domestic corporation was subject to the provisions of Article 81-15, paragraphs (1) through (3) (Foreign Tax Credit in Consolidated Business Year), the amount of the foreign country's corporate tax that was used as the basis of the calculation of the amount to be credited under these provisions has been reduced, the portion of the reduction specified by Cabinet Order as the reduced portion of the creditable amount of the foreign country's corporate tax prescribed in Article 69, paragraph (1) or the individually creditable amount of the foreign country's corporate tax prescribed in Article 81-15, paragraph (1) (excluding the amount specified by Cabinet Order as the amount to be included in gross profits) is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

(3)In the case where a first domestic corporation receives from a second domestic corporation an amount that has been calculated pursuant to the provisions of Article 81-18, paragraph (1) (Calculation of the Individually Attributed Amount of Consolidated Corporation Tax) as its payable amount of corporation tax on consolidated income for each consolidated business year or its payable amount of penalty tax (excluding interest tax; the same applies in the following paragraph), the amount to be received is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

(4)In the case where the second domestic corporation set forth in the preceding paragraph receives from the first domestic corporation set forth in the paragraph an amount that is calculated pursuant to the provisions of Article 81-18, paragraph (1) as its receivable amount from the reduction of corporation tax on consolidated income for each consolidated business year or the reduction of its payable amount of penalty tax, the amount to be received is excluded from gross profits, when calculating the amount of income of the second domestic corporation in question for each business year.

(5)In the case where a domestic corporation receives a refund of the amount to be excluded from deductible expenses in the calculation of the amount of income for each business year, pursuant to the provisions of Article 55, paragraph (4), the amount to be refunded is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

Article 28In the case where the provisions of Article 69, paragraph (8) (Foreign Tax Credit) are applied to the amount of the foreign country's corporate tax to be imposed on a domestic corporation for the income of its foreign subsidiary prescribed in the paragraph (including the amount deemed to be the amount of the foreign country's corporate tax to be imposed on the foreign subsidiary's income pursuant to the provisions of paragraph (9) of the Article) in each business year, the amount calculated as specified by the Cabinet Order prescribed in paragraph (8) of the Article is included in gross profits, when calculating the amount of income of the domestic corporation for the business year specified by Cabinet Order.

Article 29(1)When, with regard to a domestic corporation's inventories, calculating the amount to be included in deductible expenses in each business year in the calculation of the amount of income for the business year, pursuant to the provisions of Article 22, paragraph (3) (The Amount to be Included in Deductible Expenses in Each Business Year), the value of the inventories held by the domestic corporation as of the end of the business year that were used as the basis of the calculation is to be the amount evaluated based on the valuation method that the domestic corporation selected for the inventories (in the case where the domestic corporation did not select any valuation method or did not evaluate the inventories based on the valuation method of their choice, the amount evaluated based on one of the valuation methods specified by Cabinet Order).

(2)The types of valuation methods that can be selected as set forth in the preceding paragraph, procedures for the selection, and any other matters necessary for the valuation of inventories are specified by Cabinet Order.

Article 31(1)With regard to depreciable assets held by a domestic corporation as of the end of each business year, the amount to be included in deductible expenses as the depreciation allowance thereof in the calculation the amount of income for the business year, pursuant to the provisions of Article 22, paragraph (3) (The Amount to be Included in Deductible Expenses in Each Business Year), is the portion of the amount that the domestic corporation accounted for as a loss as its depreciation allowance in the business year (hereinafter referred to as the "amount accounted for as a loss" in this Article) up to the amount calculated as specified by Cabinet Order based on the depreciation method that the domestic corporation selected for the assets from among the depreciation methods specified by Cabinet Order, in accordance with the date of the acquisition of assets and the category of their types (in the case where the domestic corporation did not select any depreciation method, based on one of depreciation methods as specified by Cabinet Order) (such calculated amount is referred to as the "maximum amount of depreciation" in the following paragraph).

(2)In the case where a domestic corporation transfers its depreciable assets to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation as a result of a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation contribution (referred to as a "qualified company split by spin-off, etc." through to paragraph (4)), when the amount equivalent to the amount accounted for as a loss was accounted for as a loss with regard to the depreciable assets, the portion of the amount accounted for as a loss (referred to as the "amount accounted for as a loss during the period" in the following paragraph and paragraph (4)) up to the amount equivalent to the maximum amount of depreciation calculated with regard to the depreciable assets as prescribed in the preceding paragraph by deeming the day prior to the date of the qualified company split by spin-off, etc. to be the last day of the business year is included in deductible expenses, when calculating the amount of income for the business year containing the date of the qualified company split by spin-off, etc. (referred to as the "business year of the company split, etc." in paragraph (4)).

(3)The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted a document stating the amount accounted for as a loss during the period and other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(4)Out of the amount accounted for as a loss for depreciable assets set forth in paragraph (1) in each business year prior to the business year in which the domestic corporation set forth in the paragraph accounted for the amount as a loss with regard to the depreciable assets (hereinafter referred to as the "business year of the depreciation" in this paragraph) (such amount accounted for includes, when the depreciable assets were transferred from an acquired corporation or splitting corporation (hereinafter referred to as a "acquired corporation, etc." in this paragraph) as a result of a qualified merger or qualified company split by split-off (hereinafter referred to as a "qualified merger, etc." in this paragraph), the portion of the amount accounted for as a loss in each business year prior to the business year containing the day prior to the date of the qualified merger, etc. of the acquired corporation, etc. that was excluded from deductible expenses in the calculation of the amount of income for the business year, and when the depreciable assets were transferred from a splitting corporation, corporation making a capital contribution in kind, or transferring corporation (hereinafter referred to as a "splitting corporation, etc." in this paragraph) as a result of a qualified company split by spin-off, etc., the amount recorded in the books as the amount accounted for as a loss during the period in the business year of the company split, etc. of the splitting corporation, etc., and the portion of the amount accounted for as a loss in each business year prior to the business year of the company split, etc. that was excluded from deductible expenses in the calculation of the amount of income for each business year prior to the business year of the company split, etc.; hereinafter the same applies in this paragraph), the amount accounted for as a loss includes the amount excluded from deductible expenses in the calculation of the amount of income for each business year prior to the business year of the depreciation; and the amount accounted for as a loss during the period includes the portion of the amount accounted for as a loss for depreciable assets set forth in paragraph (2) in each business year prior to the business year of the company split, etc. of the domestic corporation set as forth in the paragraph that was excluded from deductible expenses in the calculation of the amount of income for the business year.

(5)In the case referred to in the preceding paragraph, with regard to depreciable assets held by the domestic corporation (limited to depreciable assets transferred from an acquired corporation as a result of a qualified merger, depreciable assets falling under the category of assets evaluated by fair value prescribed in Article 61-11, paragraph (1) (Gains or Losses on the Fair Valuation of Assets Accompanying the Commencement of Consolidated Taxation) to which the provisions of the paragraph were applied, and other depreciable assets as specified by Cabinet Order), in the case where the amount specified by Cabinet Order as the amount recorded in the books as the value of the depreciable assets is less than the amount recorded in the acquired corporation's books immediately prior to the transfer, the book value immediately after the provisions of paragraph (1) of the Article were applied, or any other amount specified by Cabinet Order, the amount of the shortfall is deemed to be the amount accounted for as a loss in each business year prior to the business year specified by Cabinet Order.

(6)Special provisions on depreciation methods that can be selected as set forth in paragraph (1), procedures for selecting a depreciation method, acquisition costs of depreciable assets that are used as the basis of the calculation of the depreciation allowance, and other matters necessary for the depreciation of depreciable assets are specified by Cabinet Order.

Article 32(1)With regard to deferred assets held by a domestic corporation as of the end of each business year, the amount to be included in deductible expenses as the depreciation allowance thereof in the calculation the amount of income for the business year, pursuant to the provisions of Article 22, paragraph (3) (The Amount to be Included in Deductible Expenses in Each Business Year), is to be the portion of the amount that the domestic corporation accounted for as a loss as the depreciation allowance in the business year (hereinafter referred to as the "amount accounted for as a loss" in this Article) up to the amount calculated as specified by Cabinet Order based on the period during which the expenses related to the deferred assets continued to affect the calculation (such calculated amount is referred to as the "maximum amount of depreciation" in the following paragraph).

(2)In the case where, as a result of a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified company split by spin-off, etc." in this paragraph and the following paragraph), a domestic corporation hands over its deferred assets to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (hereinafter referred to as a "succeeding corporation in a company split, etc.") (such deferred assets are limited to those related to assets, liabilities, or contracts (referred to as "assets, etc." in paragraph (4)) to be transferred as a result of the qualified company split by spin-off, etc. to the succeeding corporation in a company split, etc.), when the amount equivalent to the amount accounted for as a loss was accounted for as a loss with regard to the deferred assets, the portion of the amount accounted for as a loss (referred to as the "amount accounted for as a loss during the period" in the following paragraph and paragraph (6)) up to the amount equivalent to the maximum amount of depreciation calculated with regard to the deferred assets as prescribed in the preceding paragraph by deeming the day prior to the date of the qualified company split by spin-off, etc. to be the last day of the business year is included in deductible expenses, when calculating the amount of income for the business year containing the date of the qualified company split by spin-off, etc. (referred to as the "business year of the company split, etc." in paragraph (6)).

(3)The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted a document stating the amount accounted for as a loss during the period and other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(4)In the case where a domestic corporation has effected a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph), the deferred assets prescribed in the following items, in accordance with the category of qualified organizational restructuring listed in the relevant item, are to be succeeded to, at the book value as of immediately prior to the qualified organizational restructuring, by an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving post-formation contribution involved in the qualified organizational restructuring:

(5)The provisions of the preceding paragraph (limited to the part pertaining to item (ii), (c)) apply only in the case where the domestic corporation set forth in the paragraph has submitted a document stating the book value of the deferred assets listed in (c) of the item that are to be succeeded to by a succeeding corporation in a company split, etc. pursuant to the provisions of the preceding paragraph and other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by split-off, etc.

(6)Out of the amount accounted for as a loss for deferred assets set forth in paragraph (1) in each business year prior to the business year in which the domestic corporation set forth in the paragraph accounted for the amount as a loss with regard to the deferred assets (hereinafter referred to as the "business year of the depreciation" in this paragraph) (such amount accounted for includes, when the deferred assets were succeeded to from an acquired corporation or splitting corporation (hereinafter referred to as a "acquired corporation, etc." in this paragraph) as a result of a qualified merger or qualified company split by split-off (hereinafter referred to as a "qualified merger, etc." in this paragraph), the portion of the amount accounted for as a loss in each business year prior to the business year containing the day prior to the date of the qualified merger, etc. of the acquired corporation, etc. that was excluded from deductible expenses in the calculation of the amount of income for the business year, and when the deferred assets were succeeded to from a splitting corporation, corporation making a capital contribution in kind, or transferring corporation (hereinafter referred to as a "splitting corporation, etc." in this paragraph) as a result of a qualified company split by spin-off, etc. as prescribed in paragraph (2), the amount recorded in the books as the amount accounted for as a loss during the period in the business year of the company split, etc. of the splitting corporation, etc., and the portion of the amount accounted for as a loss in each business year prior to the business year of the company split, etc. that was excluded from deductible expenses in the calculation of the amount of income for each business year prior to the business year of the company split, etc.; hereinafter the same applies in this paragraph), the amount accounted for as a loss includes the amount excluded from deductible expenses in the calculation of the amount of income for each business year prior to the business year of the depreciation; and the amount accounted for as a loss during the period includes the portion of the amount accounted for as a loss for deferred assets set forth in paragraph (2) in each business year prior to the business year of the company split, etc. of the domestic corporation set forth in the paragraph that was excluded from deductible expenses in the calculation of the amount of income for the business year.

(7)In the case referred to in the preceding paragraph, with regard to the deferred assets held by the domestic corporation (limited to deferred assets succeeded to from an acquired corporation as a result of a qualified merger, deferred assets falling under the category of assets evaluated by fair value prescribed in Article 61-11, paragraph (1) (Gains or Losses on the Fair Valuation of Assets Accompanying the Commencement of Consolidated Taxation) to which the provisions of the paragraph were applied, and other deferred assets specified by Cabinet Order), in the case where the amount specified by Cabinet Order as the amount recorded in the books as their value is less than the amount recorded in the acquired corporation's books immediately prior to the succession, the book value immediately after the provisions of paragraph (1) of the Article were applied, or another amount as specified by Cabinet Order, the amount of the shortfall is deemed to be the amount accounted for as a loss in each business year prior to the business year specified by Cabinet Order.

(8)Beyond what is provided for in the preceding paragraphs, necessary matters concerning the depreciation of deferred assets are specified by Cabinet Order.

Article 33(1)In the case where a domestic corporation has revaluated its assets to reduce their book value, the amount of the reduction is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

(2)With regard to a domestic corporation's assets (excluding deposits, savings, loans, accounts receivable, and other claims (referred to as "deposits, etc." in the following paragraph)), when [1]the value of the assets has fallen below their book value due to significant damages caused by a disaster, [2]it has become necessary to revaluate them pursuant to the provisions of the Corporate Reorganization Act or the Act on Special Measures, etc. of Reorganization Procedure of Financial Institutions, as an order on the confirmation of a reorganization plan has been rendered under these Acts, or [3]any other events specified by Cabinet Order have occurred, and when the domestic corporation has revaluated the assets and accounted for as a loss in order to reduce their book value, the portion of the amount of the reduction up to the difference between the book value of the assets as of immediately prior to the revaluation and the value of the assets as of the end of the business year containing the date of the revaluation (in the case where the assets were revaluated based on the provisions of those Acts, the amount of the reduction) is included in deductible expenses, when calculating the amount of income for the business year containing the date of the revaluation, notwithstanding the provisions of the preceding paragraph.

(3)In the case where an order on the confirmation of a rehabilitation plan has been rendered for a domestic corporation under the Civil Rehabilitation Act or any equivalent event as specified by Cabinet Order has occurred, when the domestic corporation evaluates the value of its assets as specified by Cabinet Order, the amount specified by Cabinet Order as a valuation loss of the assets (excluding deposits, etc. or other assets as specified by Cabinet Order) is included in deductible expenses, when calculating the amount of income for the business year containing the date of any of such events, notwithstanding the provisions of paragraph (1).

(4)In the case where the provisions of paragraph (1) were applied, with regard to the assets whose reduced value due to revaluation was not included in deductible expenses, it is deemed that the book value of the assets was not reduced, when calculating the amount of income for each business year after the business year containing the date of the revaluation.

(5)The provisions of paragraph (3) apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount specified by Cabinet Order as the amount of valuation loss prescribed in the paragraph (referred to as a "detailed statement of the valuation loss" in the following paragraph) and is attached with the documents specified by Ordinance of the Ministry of Finance (referred to as "valuation loss-related documents" in the following paragraph) (when with regard to the assets prescribed in Article 25, paragraph (3) (Exclusion of Asset Valuation Gains, etc. from Gross Profits), there is any amount specified by Cabinet Order as the amount of valuation gain prescribed in the paragraph (such case is referred to as the "case where there is any valuation gain" in the following paragraph), only in the case where a tax return contains a detailed statement of the valuation gain prescribed in paragraph (5) of the Article (referred to as a "detailed statement of the valuation gain" in the following paragraph) and the valuation gain-related documents prescribed in paragraph (5) of the Article (referred to as "valuation gain-related documents" in the following paragraph)).

(6)Even in the case where a tax return has been filed without a detailed statement of the valuation loss (in the case where there is any valuation gain, without a detailed statement of the valuation loss or a detailed statement of the valuation gain) or without valuation loss-related documents (in the case where there is any valuation gain, without valuation loss-related documents or valuation gain-related documents), the district director of the tax office may apply the provisions of paragraph (3), when they find any unavoidable grounds for the person's failure to make entries of such a statement or to attach such documents.

(7)Beyond what is provided for in the preceding three paragraphs, necessary matters concerning the application of the provisions of paragraphs (1) through (3) are specified by Cabinet Order.

Article 34(1)The amount of remuneration that a domestic corporation pays to its officers (such remuneration excludes a retirement allowance and any remuneration based on share options as prescribed in Article 54, paragraph (1) (Special Provisions on the Business Year for Vesting Expenses in Exchange for Share Options), and any other remuneration that is paid to officers who have duties as employees for carrying out such duties and that is subject to the provisions of paragraph (3); hereinafter the same applies in this paragraph) and that does not fall under any of the following categories of remuneration is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year:

(2)The portion of the amount of remuneration paid by a domestic corporation to its officers (excluding remuneration subject to the provisions of the preceding paragraph or the following paragraph) that is specified by Cabinet Order as an amount which is unreasonably high is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

(3)The amount of remuneration paid by a domestic corporation to its officers through accounting by concealing or falsifying facts is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year

(4)Remuneration as prescribed in the preceding three paragraphs is to include profits resulting from a release from an obligation and other economic benefits.

(5)Officers who have duties as employees as prescribed in paragraph (1) are officers (excluding the president, chief director or others specified by Cabinet Order) who hold any of the positions of department director, section chief, or other employees of a corporation and who are engaged in the duties of a full-time employee.

(6)Beyond what is provided for in the preceding two paragraphs, necessary matters concerning the application of the provisions of paragraphs (1) through (3) are specified by Cabinet Order.

Article 35(1)The portion of the amount of remuneration (including profits resulting from a release from an obligation and other economic benefits and excluding retirement allowances) paid by a specially controlled family company (meaning a specially controlled family company in the case where the presiding officers of a family company (meaning the officers who preside over a corporation's business and limited to individuals; hereinafter the same applies in this paragraph) and persons specified by Cabinet Order as those who have a special relationship with those presiding officers (hereinafter referred to as "persons related to the presiding officers" in this paragraph) hold 90 percent or more of the total number or the total amount of the family company's issued shares or capital contributions (excluding the shares that the family company holds in itself and the capital contributions made thereby) or in other cases as specified by Cabinet Order (such specially controlled family company is limited to a company in which the number of the presiding officers and persons related to the presiding officers who are engaged in the regular running of the business exceeds 50 percent of the total number of officers who are engaged in the regular running of the business); hereinafter the same applies in this Article) to its presiding officers (such amount of remuneration is exclude the amount excluded from deductible expenses pursuant to the provisions of the preceding Article) that is calculated as specified by Cabinet Order based on the amount of the remuneration is excluded from deductible expenses, when calculating the amount of income of the specially controlled family company for each business year.

(2)The provisions of the preceding paragraph do not apply to a business year when the amount of base income (meaning the amount calculated as specified by Cabinet Order based on the amount of income or loss for each business year or each consolidated business year that starts within three years prior to the first day of the business year or the amount of individual income or individual loss prescribed in Article 81-18, paragraph (1) (Calculation of Individually Attributed Amount of Consolidated Corporation Tax)) does not exceed the amount specified by Cabinet Order nor to any other business years specified by Cabinet Order.

(3)In the case referred to in paragraph (1), the determination as to whether the domestic corporation falls under the category of a specially controlled family company is based on its circumstances as of the end of the business year of the domestic corporation.

(4)Beyond what is provided for in the preceding two paragraphs, necessary matters concerning the application of the provisions of paragraph (1) are specified by Cabinet Order.

Article 36The portion of the amount of remuneration paid by a domestic corporation to employees who have a special relationship as specified by Cabinet Order with its officers (including profits resulting from a release from an obligation and other economic benefits) that is specified by Cabinet Order as an amount which is unreasonably high is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

Article 37(1)The portion of the sum of the donations made by a domestic corporation in each business year (excluding the amount of donations subject to the provisions of the following paragraph) that exceeds the amount of the domestic corporation's stated capital, etc. as of the end of the business year or the amount calculated as specified by Cabinet Order based on the income for the business year is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

(2)When a domestic corporation has made any donation in each business year to a consolidated corporation that has a consolidated full controlling interest in the domestic corporation, the amount of such donation is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

(3)In the case referred to in paragraph (1), when the amount of a donation as prescribed in the paragraph contains any of the following amounts, the total amount of donations listed in the following items is excluded from the sum of the donations prescribed in the paragraph:

(4)In the case referred to in paragraph (1), when the amount of a donation as prescribed in the paragraph contains any amount of a donation made to a public service corporation, corporation in the public interest, etc. (excluding any of the general incorporated associations and general incorporated foundations listed in Appended Table 2; hereinafter the same applies in this paragraph and the following paragraph), or any other corporation established under special Acts that is specified by Cabinet Order as serving significantly in the promotion of education or science, the enhancement of culture, as a contribution to social welfare or any other improvement in the public interest, with regard to the business of such corporation's major purpose (excluding donations falling under any of the categories prescribed in the items of the preceding paragraph), the sum of such donations (in the case where the sum exceeds the amount of stated capital, etc. as of the end of the business year or the amount calculated as specified by Cabinet Order based on the income for the business year, the amount equivalent to the calculated amount) is excluded from the sum of the donations prescribed in paragraph (1); provided, however, that this does not apply to the amount of a donation made by a corporation in the public interest, etc.

(5)The amount that a corporation in the public interest, etc. has spent from among the assets belonging to its profit-making business for the purpose of a business other than the profit-making business (with regard to a public interest incorporated association or public interest incorporated foundation, the amount that it has spent from among the assets belonging to its profit-making business for the purpose of a business other than the profit-making business that is specified by Cabinet Order as a business related to the public interest) is deemed to be the amount of a donation related to its profit-making business and the provisions of paragraph (1) apply.

(6)The amount that a domestic corporation has spent for the purpose of entrusting as trust property under a specified charitable trust (meaning a charitable trust as prescribed in Article 1 (Charitable Trust) of the Charitable Trust Act (Act No. 62 of 1922), for which it is certified, as specified by Cabinet Order, that a trust property as of the time of the termination of the trust is not vested in a settlor of the trust related to the trust property and the operation of the trust affairs meets the requirements specified by Cabinet Order) is deemed to be the amount of a donation, and the provisions of paragraph (1), paragraph (4), paragraph (9) and paragraph (10) apply. In this case, the term "paragraph)," in paragraph (4) is deemed to be replaced with "paragraph) (such amount includes the amount spent for the purpose of entrusting as trust property under a specified charitable trust as prescribed in paragraph (6) that is specified by Cabinet Order as serving significantly in the promotion of education or science, the enhancement of culture, as a contribution to social welfare or any other improvement in the public interest," and other necessary matters concerning procedures for seeking the application of the provisions of this paragraph are specified by Cabinet Order.

(7)The amount of a donation as prescribed in the preceding paragraphs, irrespective of the donation having been made as a donation, contribution, gift, or under any other name, is to be the amount of monies in the case where a domestic corporation has made a gift or the gratuitous conveyance of monies or other assets or economic benefits (excluding expenses for advertising or providing samples or other equivalent expenses, and those deemed to be entertainment and social expenses, reception expenses, and welfare expenses; the same applies in the following paragraph), the value of the assets other than monies as of the time of the gift, or the value of the economic benefits as of the time of the conveyance.

(8)In the case where a domestic corporation has transferred assets or conveyed economic benefits, when the price for the transfer or conveyance is low compared with the value of the assets as of the transfer or the value of the economic benefits as of the conveyance, the portion of the difference between the price and the value that is deemed to have been, in effect, given as a gift or gratuitous conveyance is included in the amount of the donation set forth in the preceding paragraph.

(9)The provisions of paragraph (3) and paragraph (4) apply only in the case where a tax return states the amount listed in the items of paragraph (3) or the amount of a donation as prescribed in paragraph (4) that is excluded from the sum of the donations prescribed in paragraph (1) and contains a detailed statement concerning the donations prescribed in the items of paragraph (3) or paragraph (4), and where documents specified by Ordinance of the Ministry of Finance are retained. In this case, the amount that is excluded from the sum of the donations prescribed in paragraph (1) pursuant to the provisions of paragraph (3) or paragraph (4) does not exceed the amount entered as the amount.

(10)Even in the case where a tax return without entries for the matters or the attachment of a detailed statement set forth in the preceding paragraph, with regard to the whole or a part of the amount to be excluded from the sum of the donations prescribed in paragraph (1) pursuant to the provisions of paragraph (3) or paragraph (4), has been filed or where the documents set forth in the preceding paragraph are not retained, the district director of the tax office may apply the provisions of paragraph (3) or paragraph (4) to the amount for which there were no entries or attachments of the detailed statement or the documents were not retained, when they find any unavoidable grounds for the person's failure to make entries, attach the detailed statement, or retain the documents.

(11)When the Minister of Finance has made a designation set forth in paragraph (3), item (ii), they make a public notification thereof.

(12)Beyond what is provided for in paragraph (5) to the preceding paragraph, necessary matters concerning the application of the provisions of paragraphs (1) through (4) are specified by Cabinet Order.

Article 38(1)The amount of corporation tax (excluding delinquent tax, additional tax for understatement, additional tax for failure to file, and substantial additional tax; hereinafter the same applies in this paragraph) that a domestic corporation is to pay is excluded from deductible expenses, except for the following corporation taxes, when calculating the amount of income of the domestic corporation for each business year:

(2)The following amounts that a domestic corporation is to pay are excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year:

(3)In the case where a first domestic corporation pays to a second domestic corporation the amount calculated pursuant to the provisions of Article 81-18, paragraph (1) (Calculation of the Individually Attributed Amount of Consolidated Corporation Tax) as the second domestic corporation's receivable amount for the reduction of corporation tax on consolidated income for each consolidated business year or the reduction of the second domestic corporation's payable amount for penalty tax (excluding interest tax; the same applies in the following paragraph), the amount that the first domestic corporation pays is excluded from deductible expenses when calculating its amount of income for each business year.

(4)When the second domestic corporation set forth in the preceding paragraph pays to the first domestic corporation set forth in the paragraph the amount calculated pursuant to the provisions of Article 81-18, paragraph (1) as the second domestic corporation's payable amount of corporation tax on consolidated income for each consolidated business year or the second domestic corporation's payable amount of penalty tax, the amount that the second domestic corporation pays is excluded from deductible expenses, when calculating its amount of income for each business year.

Article 39(1)The net operating loss incurred by a domestic corporation as a result of paying national tax or local tax (including the net operating loss arising from a right to reimbursement regarding the payment; hereinafter the same applies in this Article) is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year:

(2)The net operating loss that a domestic corporation, which holds any of the amount deemed to be the amount listed in Article 23, paragraph (1), item (i) (Exclusion of Dividends Received from Gross Profits) pursuant to the provisions of Article 24, paragraph (1), item (iii) (The Amount Deemed to Be Dividends) (limited to the part pertaining to the distribution of residual assets due to dissolution) or the amount listed in Article 23, paragraph (1), item (iii) pertaining to the delivery of assets belonging to trust assets due to the termination of a trust that is excluded from gross profits in the calculation of the amount of income for each business year under the provisions of the paragraph, has incurred as a result of paying any of the following national tax or local tax, with regard to a corporation that has distributed residual assets pertaining to the amount deemed to be as above or a liquidation trustee as prescribed in Article 177 (Duties of Liquidation Trustees) of the Trust Act of the trust, is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year; provided, however, that in the case where the amount of the national tax or local tax exceeds the amount excluded from gross profits, this does not apply to the amount equivalent to the excess out of the net operating loss:

Article 40In the case where a domestic corporation seeks the application of the provisions of Article 68, paragraph (1) (Income Tax Credit), Article 78, paragraph (1) (Refund of Income Tax Amount, etc. by Final Return), or Article 133, paragraph (1) (Refund of Income Tax Amount, etc. Due to a Reassessment Related to a Final Return or Consolidated Final Return) with regard to the amount of income tax prescribed in Article 68, paragraph (1), the amount equivalent to the amount to be credited or refunded pursuant to these provisions is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

Article 41In the case where a domestic corporation seeks the application of the provisions of Article 69 (Foreign Tax Credit), Article 78, paragraph (1) (Refund of Income Tax Amount, etc. by Final Return), or Article 133, paragraph (1) (Refund of Income Tax Amount, etc. Due to a Reassessment Related to a Final Return or Consolidated Final Return) with regard to the creditable amount of the foreign country's corporate tax prescribed in Article 69, paragraph (1), the creditable amount of the foreign country's corporate tax is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

Article 42(1)In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) has received subsidies or benefits from the national or a local government or any other financial assistance as specified by Cabinet Order as being equivalent thereto (hereinafter referred to as "national subsidies, etc." through to Article 44) in each business year for the purpose of spending them to acquire or improve its fixed assets, and has acquired or improved its fixed assets with the national subsidies, etc. in line with such purpose in the relevant business year (limited to the case where it is determined that the national subsidies, etc. need not be returned by the end of the business year), when their book value has been reduced by accounting for a loss within the limit equivalent to the amount of the national subsidies, etc. spent for the acquisition or improvement of its fixed assets (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

(2)In the case where a domestic corporation has acquired fixed assets which are delivered in lieu of national subsidies, etc. in each business year, when their book value has been reduced by accounting for losses within the limit equivalent to the value of the fixed assets (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

(3)The provisions of the preceding two paragraphs apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount equivalent to the amount reduced or booked as prescribed in these provisions.

(4)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1) or paragraph (2), when they find any unavoidable grounds for the person's failure to make entries for such matters.

(5)In the case where a domestic corporation transfers, as a result of a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified company split by spin-off, etc." in this Article), any of the fixed assets that it has acquired or improved with national subsidies, etc. (limited to national subsidies, etc. that the domestic corporation has received during the period from the beginning of the business year containing the date of the qualified company split by spin-off, etc. to immediately prior to the qualified company split by spin-off, etc.) (such fixed assets are limited to those in line with the purpose of the national subsidies, etc.; hereinafter the same applies in this paragraph) to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (referred to as a "succeeding corporation in a company split, etc." in the following paragraph) (limited to the case where it is determined that the national subsidies, etc. need not be returned by the time immediately prior to the qualified company split by spin-off, etc.), when the book value of the fixed assets has been reduced to within the limit equivalent to the amount of national subsidies, etc. spent for the acquisition or improvement thereof, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

(6)In the case where a domestic corporation transfers, as a result of a qualified company split by spin-off, etc., any of the fixed assets as prescribed in paragraph (2) (limited to those acquired during the period from the beginning of the business year containing the date of the qualified company split by spin-off, etc. to immediately prior to the qualified company split by spin-off, etc.; hereinafter the same applies in this paragraph) to a succeeding corporation in a company split, etc., when the book value of the fixed assets has been reduced to within the limit equivalent to the value of the fixed assets, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

(7)The provisions of the preceding two paragraphs apply only in the case where the domestic corporation prescribed in these provisions has submitted documents stating the amount equivalent to the reduced amount prescribed in these provisions and other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(8)In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation has received the transfer of any of the fixed assets to which the provisions of paragraph (1), paragraph (2), paragraph (5), or paragraph (6) had been applied under an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or transferring corporation, as a result of a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution, the acquisition cost of the fixed assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

Article 43(1)In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) receives national subsidies, etc. in each business year (excluding a business year containing the day preceding the date of the merger of an acquired corporation (excluding a qualified merger; referred to as a "non-qualified merger" in the following paragraph and paragraph (3)) for the purpose of spending such subsidies to acquire or improve its fixed assets (limited to the case where it has not been determined that the national subsidies, etc. need not be returned by the end of the business year), when the amount not exceeding the amount equivalent to the national subsidies, etc. has been booked in such a manner as to establish a special account (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount booked as above is included in deductible expenses, when calculating the amount of income for the business year.

(2)A domestic corporation that has established a special account set forth in the preceding paragraph must, in the case where it has been determined either that national subsidies, etc. should be returned or need not be returned, or where the domestic corporation has been dissolved as a result of a non-qualified merger, or in other cases as specified by Cabinet Order, dispose of the portion of the special account pertaining to the national subsidies, etc. that has been calculated as specified by Cabinet Order.

(3)The amount of the special account set forth in paragraph (1) that is to be disposed of under the preceding paragraph or the amount of the special account that has been disposed of without falling under the provisions of the preceding paragraph (excluding the amount to be succeeded to by an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (referred to as a "acquiring corporation, etc." in paragraph (8) and paragraph (10)) pursuant to the provisions of paragraph (8)) is included in gross profits, when calculating the amount of income, respectively, for the business year containing the day on which the former amount is to be disposed of (in the case where the domestic corporation prescribed in the preceding paragraph has been dissolved as a result of a non-qualified merger, containing the day preceding the date of the non-qualified merger) or for the business year containing the day on which the latter amount was disposed of.

(4)The provisions of paragraph (1) apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount equivalent to the booked amount prescribed in the paragraph.

(5)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

(6)In the case where a domestic corporation has effected a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified company split by spin-off, etc." in this Article) and has received national subsidies, etc. for the purpose of spending them to acquire or improve its fixed assets (limited to national subsidies, etc. for which it has not been determined that they need not be returned by the time immediately prior to the qualified company split by spin-off, etc.; hereinafter the same applies in this paragraph) during the period from the beginning of the business year containing the date of the qualified company split by spin-off, etc. to immediately prior to the qualified company split by spin-off, etc. (limited to the case where any of the following requirements is met), when a special account equivalent to that which is set forth in paragraph (1) has been established within the limit equivalent to the amount of national subsidies, etc. to be spent for the acquisition or improvement of the fixed assets (hereinafter such special account is referred to as a "special account during the period" in this Article), the amount equivalent to the amount of the special account during the period established as above is included in deductible expenses, when calculating the amount of income for the business year:

(7)The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted documents stating the amount equivalent to the special account during the period and other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(8)In the case where a domestic corporation has effected a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph), the amount of a special account or special account during the period prescribed in the following items is to be succeeded to by an acquiring corporation, etc. involved in the qualified organizational restructuring, in accordance with the category of the following qualified organizational restructuring:

(9)With regard to a domestic corporation that has established a special account set forth in paragraph (1) and has effected a qualified merger, qualified contribution in kind, or qualified post-formation contribution(hereinafter referred to as a "qualified company split, etc." in this paragraph) (excluding a domestic corporation that has established both the special account and a special account during the period and carries over only the amount of the special account during the period to a succeeding corporation in a company split, etc. as a result of a qualified company split by spin-off, etc.), the provisions of the preceding paragraph apply only in the case where the domestic corporation that has established the special account has submitted documents stating the amount of the special account to be carried over to a succeeding corporation in a company split, etc. as a result of a qualified company split, etc. and any other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split, etc.

(10)The amount of a special account set forth in paragraph (1) or the amount of a special account during the period that an acquiring corporation, etc. has succeeded to pursuant to the provisions of paragraph (8) is deemed to be the amount of a special account set forth in paragraph (1) that the acquiring corporation, etc. has established pursuant to the provisions of the paragraph.

(11)Necessary matters concerning the application of the provisions of the preceding paragraphs in the case where a merger, company split, contribution in kind to the capital of the receiving corporation, or post-formation contribution of assets and/or liabilities (meaning the post-formation contribution of assets and/or liabilities prescribed in Article 2, item (xii)-6 (Definitions)) has been effected are specified by Cabinet Order.

Article 44(1)In the case where a domestic corporation that holds the amount of a special account set forth in paragraph (1) of the preceding Article (excluding the amount already having been disposed of) has acquired or improved its fixed assets with national subsidies, etc. in line with the purpose thereof (in the case where the domestic corporation has succeeded to the amount of the special account from an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or transferring corporation (hereinafter referred to as a "acquired corporation, etc." in this paragraph and paragraph (6)), pursuant to the provisions of Article 43, paragraph (8) (hereinafter such case is referred to as the "case where there was any succession" in this paragraph), including the case where the acquired corporation, etc. has acquired or improved such fixed assets with national subsidies, etc.; hereinafter the same applies in this paragraph and paragraph (4)), and where it has been determined that the whole or a part of the national subsidies, etc. spent for the acquisition or improvement need not be returned in a business year after the business year containing the date of the acquisition or improvement (in the case where there was any succession, in a business year after the business year containing the date of a qualified organizational restructuring as prescribed in Article 43, paragraph (8) (referred to as a "qualified organizational restructuring" in paragraph (6)), when the book value of the fixed assets has been reduced by accounting for losses within the limit of the amount calculated, as specified by Cabinet Order, as the portion of the special account as of the date of the determination that pertains to the national subsidies, etc. for which it has been determined that they need not be returned (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph and paragraph (4)) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

(2)The provisions of the preceding paragraph apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount reduced or booked as prescribed in the paragraph.

(3)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

(4)In the case where a domestic corporation that holds the amount of a special account set forth in paragraph (1) has effected a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified company split by spin-off, etc." in this paragraph and the following paragraph) and where the domestic corporation has acquired or improved its fixed assets with the national subsidies, etc. in line with the purpose thereof immediately prior to the qualified company split by spin-off, etc. (limited to the case where it has determined that the whole or a part of the national subsidies, etc. spent for the acquisition or improvement need not be returned during the period from the beginning of the business year containing the date of the qualified company split by spin-off, etc. to immediately prior to the qualified company split by spin-off, etc. and where the fixed assets acquired or improved are to be transferred to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation as a result of the qualified company split by spin-off), when the book value of the fixed assets has been reduced to within the advanced depreciation limit, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

(5)The provisions of the preceding paragraph apply only in the case where the domestic corporation prescribed in the paragraph has submitted documents stating the amount equivalent to the reduced amount prescribed in the paragraph and other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(6)In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation has received the transfer of any of the fixed assets to which the provisions of paragraph (1) or paragraph (4) had been applied under an acquired corporation, etc., as a result of a qualified organizational restructuring, the acquisition cost of the fixed assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

Article 45(1)In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) that conducts any of the following businesses has received monies or materials in each business year, for the purpose of establishing the facilities necessary for conducting the business, from persons who consume electricity, gas or water, persons who receive a heat supply, persons who use railway or rail track services or wire broadcasting telephone services, or other persons who enjoy benefits from such facilities (hereinafter referred to as the "users" in this Article) and has acquired fixed assets comprising such facilities with the monies or materials in the business year, when the book value of the fixed assets has been reduced by accounting for losses within the limit of the amount equivalent to that of the monies paid or the value of the materials provided (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year:

(2)In the case where the domestic corporation set forth in the preceding paragraph has received the delivery of fixed assets comprising the facilities necessary for conducting the businesses listed in the items of the paragraph in each business year from the users of the business, when the book value of the fixed assets has been reduced by accounting for losses within the limit of the amount equivalent to the value of the fixed assets (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

(3)The provisions of the preceding two paragraphs apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount reduced or booked as prescribed in these provisions.

(4)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1) or paragraph (2), when they find any unavoidable grounds for the person's failure to make entries for such matters.

(5)In the case where the domestic corporation set forth in the preceding paragraph transfers, as a result of a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified company split by spin-off, etc." in this Article), its fixed assets (limited to fixed assets that the domestic corporation acquired by receiving monies or materials, for the purpose of establishing the facilities necessary for conducting the business listed in paragraph (1), from the users of the business during the period from the beginning of the business year containing the date of the qualified company split by spin-off, etc. to immediately prior to the qualified company split by spin-off, etc. and that comprise the facilities) to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (referred to as a "succeeding corporation in a company split, etc." in the following paragraph), when the book value of the fixed assets has been reduced to within the amount equivalent to that of the monies paid or the value of the materials provided, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

(6)In the case where the domestic corporation set forth in paragraph (1) transfers, as a result of a qualified company split by spin-off, etc., fixed assets comprising the facilities necessary for conducting the business listed in the items of the paragraph (limited to the fixed assets that the domestic corporation acquired from the users of the business during the period from the beginning of the business year containing the date of the qualified company split by spin-off, etc. to immediately prior to the qualified company split by spin-off, etc.) to a succeeding corporation in a company split, etc., when the book value of the fixed assets has been reduced to within the amount equivalent to the value of the fixed assets, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

(7)The provisions of the preceding two paragraphs apply only in the case where the domestic corporation prescribed in these provisions has submitted documents stating the amount equivalent to the reduced amount prescribed in these provisions and any other matters as specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(8)In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation has received the transfer of any of the fixed assets to which the provisions of paragraph (1), paragraph (2), paragraph (5), or paragraph (6) had been applied under an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or transferring corporation, as a result of a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution, acquisition cost of the fixed assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

Article 46(1)In the case where cooperatives, etc. that do not hold capital contributions allots the expenses for acquiring or improving its fixed assets to be used for its business to its partners or members in each business year and has acquired or improved any fixed assets to be used for its business with the monies paid based on such allotment in the business year (hereinafter referred to as "allotment monies" in this paragraph), when the book value of the fixed assets has been reduced by accounting for losses within the limit equivalent to the amount of the allotment monies spent for the acquisition or improvement of the fixed assets (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

(2)The provisions of the preceding paragraph apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount equivalent to the amount reduced or booked as prescribed in the paragraph.

(3)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

Article 47(1)In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) has received, in each business year, insurance monies, mutual aid monies, or compensation for damages that is specified by Cabinet Order (referred to as "insurance monies, etc." through to Article 49) for any loss of or damage to its fixed assets (in the case where the domestic corporation has effected a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph and paragraph (8)) through which the domestic corporation becomes an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (referred to as a "acquiring corporation, etc." in paragraph (8)), such fixed assets include those owned by the acquired corporation, splitting corporation, corporation making a capital contribution in kind, or transferring corporation (referred to as a "acquired corporation, etc." in paragraph (8)) involved in the qualified organizational restructuring; hereinafter referred to as "owned fixed assets" in this Article), and has acquired the same type of fixed assets substituting the owned fixed assets that were lost (hereinafter referred to as "substituted assets" in this Article) with the insurance monies, etc. (excluding the acquisition through a lease transaction that is specified by Cabinet Order as a transaction wherein the ownership is not transferred out of those prescribed in Article 64-2, paragraph (3) (Calculation of the Amount of Income of the Act pertaining to Lease Transactions); hereinafter the same applies in this paragraph and paragraph (5)), or has improved the owned fixed assets that were damaged or assets to be substituted assets in the business year, when the book value of the fixed assets has been reduced by accounting for losses within the limit equivalent to the gain pertaining to insurance monies, etc. spent for the acquisition or improvement of the fixed assets (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

(2)In the case where a domestic corporation has received the delivery of substituted assets in lieu of insurance monies, etc. for the loss of or damage to its owned fixed assets in each business year, when the book value of the substituted assets has been reduced by accounting for losses within the limit of the amount calculated as specified by Cabinet Order as the amount of the gain pertaining to the substituted assets (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

(3)The provisions of the preceding two paragraphs apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount equivalent to the amount reduced or booked as prescribed in these provisions.

(4)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1) or paragraph (2), when they find any unavoidable grounds for the person's failure to make entries for such matters.

(5)In the case where a domestic corporation transfers, as a result of a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified company split by spin-off, etc." in this Article), the fixed assets (limited to substituted assets that the domestic corporation acquired with the insurance monies, etc. it had received for the loss of or damage to its owned fixed assets during the period from the beginning of the business year containing the date of the qualified company split by spin-off, etc. to immediately prior to the qualified company split by spin-off, etc., or any of its owned fixed assets which had been damaged and that it improved with the insurance monies, etc. it had received for the loss or damage during the period or assets to become substituted assets; hereinafter the same applies in this paragraph) to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (referred to as a "succeeding corporation in a company split, etc." in the following paragraph), when the book value of the fixed assets has been reduced to within the amount equivalent to the advanced depreciation limit prescribed in paragraph (1), the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

(6)In the case where a domestic corporation transfers, as a result of a qualified company split by spin-off, etc., substituted assets (limited to assets which have been delivered to the domestic corporation in lieu of insurance monies, etc. for the loss of or damage to its owned fixed assets during the period from the beginning of the business year containing the date of the qualified company split by spin-off, etc. to immediately prior to the qualified company split by spin-off, etc.; hereinafter the same applies in this paragraph) to a succeeding corporation in a company split, etc., when the book value of the substituted assets has been reduced to within the amount equivalent to the advanced depreciation limit prescribed in paragraph (2), the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

(7)The provisions of the preceding two paragraphs apply only in the case where the domestic corporation prescribed in these provisions has submitted documents stating the amount equivalent to the reduced amount prescribed in these provisions and other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(8)In the case where an acquiring corporation, etc. has received the transfer of any of the fixed assets to which the provisions of paragraph (1), paragraph (2), paragraph (5), or paragraph (6) had been applied under an acquired corporation, etc. as a result of a qualified organizational restructuring, the acquisition cost of the fixed assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

Article 48(1)In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) that is to receive the payment of insurance monies, etc. intends to make an acquisition or improvement as prescribed in paragraph (1) of the preceding Article with the insurance monies, etc. during the period up to the day preceding the day on which two years have elapsed from the day following the last day of the business year in which it receives the payment (excluding a business year containing the day preceding the date of a merger (excluding a qualified merger; referred to as a "non-qualified merger" in the following paragraph and paragraph (3)) of an acquired corporation) (in the case where it is difficult to acquire the substituted assets prescribed in paragraph (1) of the preceding Article as prescribed in the paragraph by the date due to any disaster or other unavoidable circumstances, during the period up to the day designated by the competent district director with jurisdiction over the place for tax payment as specified by Cabinet Order (referred to as the "designated date" in paragraph (6) and paragraph (8)) (such case includes the case where the domestic corporation has effected a qualified merger through which it becomes an acquired corporation, and where the acquiring corporation involved in the qualified merger intends to make the acquisition or improvement or other cases specified by Cabinet Order), when the amount not exceeding the amount calculated as a gain pertaining to the insurance monies, etc to be spent for the acquisition or improvement as specified by Cabinet Order has been booked in such a manner as to establish a special account (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount booked as above is included in deductible expenses, when calculating the amount of income for the business year.

(2)A domestic corporation that has established a special account set forth in the preceding paragraph must, in the case where it has acquired substituted assets as prescribed in paragraph (1) of the preceding Article as specified in the paragraph, or where the domestic corporation has been dissolved as a result of a non-qualified merger, or in other cases as specified by Cabinet Order, dispose of the portion of the special account pertaining to the insurance monies, etc. that has been calculated as specified by Cabinet Order.

(3)The amount of the special account set forth in paragraph (1) that is to be disposed of under the preceding paragraph or the amount of the special account that has been disposed of without falling under the provisions of the preceding paragraph (excluding the amount to be succeeded to by an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (referred to as a "acquiring corporation, etc." in paragraph (8) and paragraph (10)) pursuant to the provisions of paragraph (8))is included in gross profits, when calculating the amount of income, respectively, for the business year containing the day on which the former amount is to be disposed of (in the case where the domestic corporation prescribed in the preceding paragraph has been dissolved as a result of a non-qualified merger, containing the day preceding the date of the non-qualified merger) or for the business year containing the day on which the latter amount was disposed of.

(4)The provisions of paragraph (1) apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount equivalent to the booked amount prescribed in the paragraph.

(5)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

(6)In the case where a domestic corporation has effected a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation acquisition (hereinafter referred to as a "qualified company split by spin-off, etc." in this Article) and has received the payment of insurance monies, etc. during the period from the beginning of the business year containing the date of the qualified company split by spin-off, etc. to immediately prior to the qualified company split by spin-off, etc. (limited to the case where the succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (referred to as a "succeeding corporation in a company split, etc." in paragraph (8) and paragraph (9)) involved in the qualified company split by spin-off, etc. is expected to make an acquisition or improvement as prescribed in paragraph (1) of the preceding Article with the insurance monies, etc. during the period from the date of the qualified company split by spin-off, etc. to the day preceding the day on which two years have elapsed from the day following the last day of the business year (in the case where any date is designated, up to the designated date), when a special account equivalent to that which is set forth in paragraph (1) has been established within the limit equivalent to the amount of insurance monies, etc. to be spent for the acquisition or improvement (hereinafter such special account is referred to as a "special account during the period" in this Article), the amount equivalent to the amount of the special account during the period established as above is included in deductible expenses, when calculating the amount of income for the business year:

(7)The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted documents stating the amount equivalent to the special account during the period and other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(8)In the case where a domestic corporation has effected a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph), the amount of a special account or special account during the period as prescribed in the following items is to be succeeded to by an acquiring corporation, etc. involved in the qualified organizational restructuring, in accordance with the category of the following qualified organizational restructuring:

(9)With regard to a domestic corporation that has established a special account set forth in paragraph (1) and has effected a qualified merger, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified company split, etc." in this paragraph) (excluding a domestic corporation that has established both the special account and a special account during the period and carries over only the amount of the special account during the period to a succeeding corporation in a company split, etc. as a result of a qualified company split by spin-off, etc.), the provisions of the preceding paragraph apply only in the case where the domestic corporation that has established the special account has submitted documents stating the amount of the special account to be carried over to a succeeding corporation in a company split, etc. as a result of a qualified company split, etc. and other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split, etc.

(10)The amount of a special account set forth in paragraph (1) or the amount of a special account during the period that an acquiring corporation, etc. has succeeded to pursuant to the provisions of paragraph (8) is deemed to be the amount of a special account set forth in paragraph (1) that the acquiring corporation, etc. has established pursuant to the provisions of the paragraph.

(11)Necessary matters concerning the application of the provisions of the preceding paragraphs in the case where a merger, company split, contribution in kind to the capital of the receiving corporation, or post-formation contribution (meaning the post-formation contribution prescribed in Article 2, item (xii)-6 (Definitions)) has been effected are specified by Cabinet Order.

Article 49(1)In the case where a domestic corporation that holds the amount of a special account set forth in paragraph (1) of the preceding Article (excluding the amount already having been disposed of) has made an acquisition or improvement as prescribed in the paragraph during the period prescribed in the paragraph (in the case where the amount of the special account was the amount succeeded to from an acquired corporation pursuant to the provisions of paragraph (8) of the preceding Article or in other cases as specified by Cabinet Order, during the period specified by Cabinet Order; referred to as the "designated acquisition period" in paragraph (4)), when the book value of the fixed assets pertaining to the acquisition or improvement has been reduced by accounting for losses to within the limit of the amount calculated, as specified by Cabinet Order, as the portion of the special account as of the date of the acquisition or improvement that pertains to the insurance monies, etc. spent for the acquisition or improvement (hereinafter such limit is referred to as the "advanced depreciation limit" in this paragraph and paragraph (4)) or the amount not exceeding the advanced depreciation limit has been booked in such a manner as to save it as a reserve (including in a manner as specified by Cabinet Order) in the final settlement of the accounts in the business year, the amount equivalent to the amount reduced or booked as above is included in deductible expenses, when calculating the amount of income for the business year.

(2)The provisions of the preceding paragraph apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount reduced or booked as prescribed in the paragraph.

(3)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

(4)In the case where a domestic corporation that holds the amount of a special account set forth in paragraph (1) has effected a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified company split by spin-off, etc." in this paragraph and the following paragraph) and where the domestic corporation has made an acquisition or improvement as prescribed in paragraph (1) during the period from the beginning of the business year containing the date of the qualified company split by spin-off, etc. to immediately prior to the qualified company split by spin-off, etc. (limited to the case where the acquisition or improvement has been made during the designated acquisition period pertaining to the acquisition or improvement, and the acquired or improved fixed assets are to be transferred to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation as a result of the qualified company split by spin-off, etc.), when the book value of the fixed assets has been reduced to within the advanced depreciation limit, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

(5)The provisions of the preceding paragraph apply only in the case where the domestic corporation prescribed in the paragraph has submitted documents stating the amount equivalent to the reduced amount prescribed in the paragraph and other matters as specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(6)In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation has received the transfer of any of the fixed assets to which the provisions of paragraph (1) or paragraph (4) had been applied under an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or transferring corporation, as a result of a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution , acquisition cost of the fixed assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

Article 50(1)In the case where a domestic corporation (excluding a domestic corporation in liquidation; hereinafter the same applies in this Article) has, in each business year, exchanged any of the following fixed assets that it had owned for one year or longer (including fixed assets that the domestic corporation had received from an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or transferring corporation (hereinafter referred to as a "acquired corporation, etc." in this paragraph and paragraph (7)) as a result of a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph and paragraph (7)) and that had been owned by the acquired corporation, etc. and the domestic corporation for one year or longer in total) with the relevant fixed assets listed as follows that other persons had owned for one year or longer (including fixed assets that the other persons had received from an acquired corporation, etc. as a result of qualified organizational restructuring and that had been owned by the acquired corporation, etc. and the other persons for one year or longer in total) (such fixed assets exclude those deemed to have been acquired for the purpose of exchanging them with other assets), and has used the following assets that it acquired through the exchange (hereinafter referred to as the "acquired assets" in this Article) for the same usage as that of the relevant assets listed as follows that it transferred through the exchange (hereinafter referred to as the "transferred assets" in this Article) immediately prior to the transfer, when the book value of the acquired assets has been reduced by accounting for losses within the limit of the amount calculated as specified by Cabinet Order as the amount of gain on the exchange, the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year:

(2)The provisions of the preceding paragraph and paragraph (5) do not apply in the case where the difference between the value of the acquired assets and that of the transferred assets at the time of an exchange set forth in these provisions exceeds 20 percent of the larger value of either of these.

(3)The provisions of paragraph (1) apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount reduced as prescribed in the paragraph.

(4)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

(5)In the case where a domestic corporation transfers, as a result of a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation contribution(hereinafter referred to as a "qualified company split by spin-off, etc." in this paragraph and the following paragraph), any acquired assets (limited to assets that had been acquired through an exchange as prescribed in paragraph (1) during the period from the beginning of the business year containing the date of the qualified company split by spin-off, etc. to immediately prior to the qualified company split by spin-off, etc. and used for the same usage as that of the transferred assets immediately prior to the transfer) to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation, when the book value of the acquired assets has been reduced to within the amount equivalent to the calculated amount prescribed in paragraph (1), the amount equivalent to the amount reduced as above is included in deductible expenses, when calculating the amount of income for the business year.

(6)The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted documents stating the amount equivalent to the reduced amount prescribed in the paragraph and other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(7)In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation has received the transfer of any of the fixed assets to which the provisions of paragraph (1) or paragraph (5) had been applied under an acquired corporation, etc. as a result of a qualified organizational restructuring, acquisition cost of the fixed assets and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

Article 52(1)In the case where a domestic corporation is granted a grace period for payment or is allowed an installment payment of their monetary claims, based on the order on the confirmation of a reorganization plan, pursuant to the provisions of the Corporate Reorganization Act, or in any other cases specified by Cabinet Order, the amount credited to the reserve for bad debts in each business year, by accounting for losses, to be the prospective net operating loss on monetary claims, part of which are expected to generate loss due to bad debts or on any other equivalent grounds (in the case where there are other monetary claims for the debtor of the monetary claims (excluding any monetary claims to be transferred to a succeeding corporation in a company split as a result of a company split by split-off that does not fall under the category of a qualified company split by split-off), including this other monetary claims and excluding any monetary claims to be transferred to an acquiring corporation or succeeding corporation in a company split (referred to as a "acquiring corporation, etc." in the following paragraph) as a result of a merger that does not fall under the category of a qualified merger or a company split by split-off that does not fall under the category of a qualified company split by split-off (referred to as a "non-qualified merger, etc." in the following paragraph); hereinafter such monetary claims are referred to as "individually assessed monetary claims" in this Article) is included in deductible expenses, when calculating the amount of income for the business year, up to the amount calculated as specified by Cabinet Order, based on the portion of the amount credited for which it is deemed that there is little chance of the collection or payment of the individually assessed monetary claims as of the end of the business year (such calculated amount is referred to as the "limit to individual credit reserve for bad debts" in paragraph (5)).

(2)The amount that a domestic corporation has credited to the reserve for bad debts in each business year, by accounting for losses, to be the prospective net operating loss due to the bad debts of their accounts receivable, loans, or any other equivalent monetary claims (excluding individually assessed monetary claims and monetary claims to be transferred to an acquiring corporation, etc. as a result of a non-qualified merger, etc.; hereinafter referred to as "collectively assessed monetary claims" in this paragraph),is included in deductible expenses, when calculating the amount of income for the business year, up to the amount calculated as specified by Cabinet Order, based on the amount of collectively assessed monetary claims as of the end of the business year and the net operating loss due to the bad debts of the accounts receivable, loans, or any other equivalent monetary claims.

(3)The provisions of the preceding two paragraphs apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount credited to the reserve for bad debts prescribed in these provisions.

(4)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1) and paragraph (2), when they find any unavoidable grounds for the person's failure to make entries for such matters.

(5)In the case where a domestic corporation transfers individually assessed monetary claims to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation as a result of a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified company split by spin-off, etc." in this Article), when an account equivalent to the reserve for bad debts set forth in paragraph (1) (hereinafter referred to as the "reserve for bad debts during the period" in this Article) has been established with regard to the individually assessed monetary claims, the portion of the amount equivalent to the amount of the reserve for bad debts during the period established as above is included in deductible expenses, when calculating the amount of income for the business year containing the date of the qualified company split by spin-off, etc.," up to the amount equivalent to the limit to individual credit reserve for bad debts calculated as prescribed in paragraph (1) with regard to the individually assessed monetary claims by deeming the time immediately prior to the qualified company split by spin-off, etc. to be the end of the business year.

(6)The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted documents stating the amount equivalent to the amount of the reserve for bad debts during the period and other matters specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(7)In the case where a domestic corporation has effected a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph and paragraph (10)), the amount of the reserve for bad debts or the reserve for bad debts during the period prescribed in the following items, in accordance with the category of qualified organizational restructuring listed in the relevant item, is to be succeeded to by an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (referred to as a "acquiring corporation, etc." in paragraph (10)) involved in the qualified organizational restructuring:

(8)With regard to the application of the provisions of paragraph (1), paragraph (2) and paragraph (5), individually assessed monetary claims and collectively assessed monetary claims do not include any monetary claims that a domestic corporation holds against a consolidated corporation that has a consolidated full controlling interest in the domestic corporation.

(9)The amount of the reserve for bad debts prescribed in paragraph (1) or paragraph (2) that was included in deductible expenses, when calculating the amount of income for each business year (excluding the amount succeeded to by a succeeding corporation in a company split involved in a qualified company split by split-off pursuant to the provisions of paragraph (7)), is included in gross profits, when calculating the amount of income for the business year following the business year.

(10)The amount of the reserve for bad debts or the reserve for bad debts during the period succeeded to by an acquiring corporation, etc. pursuant to the provisions of paragraph (7) is included in gross profits, when calculating the amount of income for the business year containing the date of a qualified organizational restructuring of the acquiring corporation, etc.

(11)In the case where a specified ordinary corporation prescribed in Article 10-3, paragraph (1) (Application of this Act in the Case of Revising the Scope of Taxable Income, etc.) falls under the category of a corporation in the public interest, etc., the provisions of paragraph (1) and paragraph (2) do not apply to the business year containing the day preceding the day on which the corporation falls under the category.

(12)Beyond what is provided for in paragraph (3), paragraph (4), and paragraph (6), necessary matters concerning the application of the provisions of paragraph (1), paragraph (2), paragraph (5), and paragraph (7) to the preceding paragraph are specified by Cabinet Order.

Article 53(1)With regard to a domestic corporation that conducts a publishing business or any other business as specified by Cabinet Order (hereinafter referred to as a "relevant business" in this Article) and who continuously concludes special agreements on redemption of most of their inventories for a sale related to the relevant business at the value at the time of the sale thereof or any other special agreements specified by Cabinet Order, the amount credited to the reserve for losses on returned goods at the end of each business year, by accounting for losses, to be the prospective net operating loss due to the redemption of the inventories (excluding inventories related to a business to be transferred to an acquiring corporation or succeeding corporation in a company split as a result of a merger that does not fall under the category of a qualified merger or a company split by split-off that does not fall under the category of a qualified company split by split-off), under the special agreements, is included in deductible expenses, when calculating the amount of income for the business year, up to the amount calculated as specified by Cabinet Order, based on the actual amount of the redemption of the inventories related to the relevant business under the special agreements in recent years (such calculated amount is referred to as the "limit to credit reserve for loss on returned goods" in paragraph (4)).

(2)The provisions of the preceding paragraph apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount credited to the reserve for loss on returned goods.

(3)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

(4)In the case where a domestic corporation transfers the whole or a part of the relevant business to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation as a result of a qualified company split by spin-off, qualified contribution in kind, or qualified post-formation contribution (referred to as a "qualified company split by spin-off, etc." through to paragraph (6)), when an account equivalent to the reserve for loss on returned goods set forth in paragraph (1) (hereinafter referred to as the "reserve for loss on returned goods during the period" in this Article) has been established with regard to the relevant business to be transferred, the portion of the amount equivalent to the amount of the reserve for loss on returned goods during the period established as above is included in deductible expenses, when calculating the amount of income for the business year containing the date of the qualified company split by spin-off, etc.," up to the amount equivalent to the limit to credit reserve for loss on returned goods calculated as prescribed in paragraph (1) by deeming the time immediately prior to the qualified company split by spin-off, etc. to be the end of the business year.

(5)The provisions of the preceding paragraph apply only in the case where the domestic corporation set forth in the paragraph has submitted documents stating the amount equivalent to the reserve for loss on returned goods during the period and any other matters as specified by Ordinance of the Ministry of Finance to the competent district director with jurisdiction over the place for tax payment, within two months after the date of the qualified company split by spin-off, etc.

(6)In the case where a domestic corporation has effected a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph and paragraph (8)), the amount of the reserve for loss on returned goods or the reserve for loss on returned goods during the period prescribed in the following items, in accordance with the category of qualified organizational restructuring listed in the relevant item, is to be succeeded to by an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (referred to as a "acquiring corporation, etc." in paragraph (8)) involved in the qualified organizational restructuring:

(7)The amount of the reserve for loss on returned goods prescribed in paragraph (1) that was included in deductible expenses, when calculating the amount of income for each business year (excluding the amount succeeded to by a succeeding corporation in a company split involved in a qualified company split by split-off pursuant to the provisions of the preceding paragraph), is included in gross profits, when calculating the amount of income for the business year following the business year.

(8)The amount of the reserve for loss on returned goods or the reserve for loss on returned goods during the period succeeded to by an acquiring corporation, etc. pursuant to the provisions of paragraph (6) is included in gross profits, when calculating the amount of income for the business year containing the date of a qualified organizational restructuring of the acquiring corporation, etc.

(9)In the case where a specified ordinary corporation as prescribed in Article 10-3, paragraph (1) (Application of this Act in the Case of Revising the Scope of Taxable Income, etc.) comes to fall under the category of a corporation in the public interest, etc., the provisions of paragraph (1) do not apply to the business year containing the day preceding the day on which the corporation comes to fall under the category.

(10)Beyond what is provided for in paragraph (2), paragraph (3), and paragraph (5), necessary matters concerning the application of the provisions of paragraph (1), paragraph (4), and paragraph (6) through the preceding paragraph are specified by Cabinet Order.

Article 54(1)In the case where a domestic corporation receives the provision of services from an individual and has issued, as the consideration for the expenses for providing the services, share options (limited to share options that offset the claims arising on the individual as the consideration for providing the services, in lieu of the payment in exchange for the share options) (including the case where a domestic corporation that is an acquiring corporation, succeeding corporation in a company split, wholly owning parent corporation in a share exchange, or wholly owning parent corporation in a share transfer (referred to as a "acquiring corporation, etc." in the following paragraph) involved in a merger, company split, share exchange, or share transfer (hereinafter referred to as a "merger, etc." in this paragraph) has delivered its own share options (referred to as "succeeding share options" in the following paragraph and paragraph (3)) to a person who holds the share options of the acquired corporation, splitting corporation, wholly owned subsidiary corporation in the share exchange, or wholly owned subsidiary corporation in the share transfer involved in the merger, etc.), the provisions of this Act apply by deeming that the domestic corporation had received the provision of the services as of the day on which the grounds occurred for the emergence of the amount to be included in the individual's gross revenue or revenue from employment income as prescribed in the Income Tax Act or other income prescribed in other laws and regulations on income tax, with regard to the provision of the services, pursuant to the provisions of the Income Tax Act and other laws and regulations on income tax (such grounds are referred to as "grounds for taxation on earnings, etc." in the following paragraph).

(2)In the case prescribed in the preceding paragraph, when no grounds for taxation on earnings, etc. occur with regard to an individual for the provision of the services set forth in the paragraph, the amount of expenses for the provision of the services incurred by a domestic corporation that has issued share options set forth in the paragraph (including a domestic corporation that is an acquiring corporation, etc. having delivered succeeding share options; hereinafter referred to as an "issuing corporation" in this Article) is excluded from deductible expenses, when calculating the amount of income of the issuing corporation for each business year.

(3)In the case prescribed in the preceding paragraph, when share options (including succeeding share options) set forth in paragraph (1) have become extinct, the amount of gain on the extinction is excluded from gross profits, when calculating the amount of income of the issuing corporation for each business year.

(4)The issuing corporation must attach to a tax return a detailed statement concerning the value of the share options per share at the time of issuance, the number of the issued share options, the number of the share options exercised in the business year, and other circumstances which affect the share options.

(5)In the case where a domestic corporation issues share options and where the amount of monies to be paid in exchange for the share options (including the value of assets other than monies to be delivered in lieu of the payment of monies and the amount of claims to be offset; hereinafter the same applies in this paragraph) does not reach the value of the share options at the time of issuance (including the case where the domestic corporation has issued the share options without compensation) or where the amount of monies to be paid in exchange for the share options exceeds the value of the share options at the time of issuance, the amount equivalent to the shortfall (in the case where the domestic corporation has issued the share options without compensation, the value of the share options at the time of issuance) or the amount equivalent to the excess is excluded from deductible expenses or gross profits, when calculating the amount of income of the domestic corporation for each business year.

(6)Beyond what is provided for in paragraph (4), necessary matters concerning the application of the provisions of paragraphs (1) through (3) or the preceding paragraph are specified by Cabinet Order.

Article 55(1)In the case where a domestic corporation reduces or attempts to reduce the burden of corporation tax by concealing or falsifying the whole or a part of the facts that are to be used as the basis of the calculation of the amount of its income, loss, or corporation tax (hereinafter referred to as "acts of concealing or falsifying" in this paragraph and the following paragraph), the amount of expenses required for the acts of concealing or falsifying or the net operating loss arising from the acts of concealing or falsifying is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

(2)The provisions of the preceding paragraph apply mutatis mutandis to the case where a domestic corporation reduces or attempts to reduce the burden of taxes other than corporation tax that it is due to pay through any acts of concealing or falsifying.

(3)The following amounts that a domestic corporation pays are excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year:

(4)The following amounts that a domestic corporation pays are excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year:

(5)The amount of a bribe as prescribed in Article 198 (Bribe) of the Penal Code (Act No. 45 of 1907), monies or other profits as prescribed in Article 18, paragraph (1) (Prohibition of Provision of Illicit Profit, etc. to Foreign Public Officials, etc.) of the Unfair Competition Prevention Act (Act No.47 of 1993), and the value of assets other than monies which is provided by a domestic corporation, and the amount of expenses equivalent to the total of the economic benefits or the net operating loss (including the amount of expenses required for the provision thereof or the net operating loss on the provision thereof),is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

Article 57(1)In the case where a domestic corporation that files a final return form shows any net operating loss that arose in a business year starting within seven years prior to the first day of each of its business years (such amount excludes the amount that was included in deductible expenses in the calculation of the amount of income for the business year prior to each relevant business year under this paragraph and the amount that was used as the basis of the calculation of the amount to be refunded under Article 80 (Refund by Carryback of Loss)), the amount equivalent to the loss is included in deductible expenses, when calculating the amount of income for each relevant business year; provided, however, that in the case where the amount equivalent to the loss exceeds the amount of income for each relevant business year calculated without applying the provisions of the main clause to the loss (in the case where there is any amount which is equivalent to any loss that had arisen in a business year prior to the business year when the loss arose and which is to be included in deductible expenses when calculating the amount of income for each relevant business year under the main clause or Article 58, paragraph (1) (Carryover of Losses Due to a Disaster in a Business Year When a Blue Return Has Not Been Filed), exceeds the amount that remains after deducting the amount to be included in deductible expenses from the calculated income), the provisions of the main clause do not apply to the amount of the excess.

(2)In the case where a qualified merger, etc. (meaning a qualified merger or what is specified by Cabinet Order as a company split by split-off categorized into a merger that falls under the category of a qualified company split by split-off (hereinafter referred to as a "quasi-merger qualified company split by split-off" in this Article); hereinafter the same applies in this paragraph and the following paragraph) has been effected, when an acquired corporation or splitting corporation (hereinafter referred to as a "acquired corporation, etc." in this paragraph and the following paragraph) involved in the qualified merger, etc. shows any net operating loss that arose in each of the business years starting within seven years prior to the date of the qualified merger, etc. (hereinafter referred to as a "business year within preceding seven years") (such net operating loss is limited to the net operating loss only in the case where the acquired corporation, etc. has filed a final return in a blue return for the business year within preceding seven years when the loss arose (such loss includes a loss which was deemed to be that of the acquired corporation, etc. under this paragraph or paragraph (6) and exclude a loss which was deemed not to exist under paragraph (5) or paragraph (9); the same applies in the following paragraph, paragraph (4), and paragraph (9)) or meets any other requirements as specified by Cabinet Order, and excludes the amount included in deductible expenses when calculating the amount of income for a business year within preceding seven years of the acquired corporation, etc. under the preceding paragraph and the amount used as the basis of the calculation of the amount to be refunded under Article 80; hereinafter referred to as the "amount of unappropriated loss" in this paragraph), with regard to the application of the provisions of the preceding paragraph in each business year after the business year containing the date of the qualified merger, etc. (hereinafter referred to as the "business year of the merger, etc." in this paragraph and the following paragraph) of an acquiring corporation or succeeding corporation in a company split (hereinafter referred to as a "acquiring corporation, etc." in this paragraph and the following paragraph) involved in the qualified merger, etc., the amount of unappropriated loss that arose in the business year within preceding seven years is deemed to be the net operating loss that arose in each business year of the acquiring corporation, etc. containing the first day of the business years within preceding seven years when the amount of the respective unappropriated loss arose (or the amount of the unappropriated loss that arose in the business year within preceding seven years of the acquired corporation, etc. starting on or after the first day of the business year of the merger, etc. of the acquiring corporation, etc. is deemed to be the net operating loss that arose in the business year preceding the business year of the merger, etc.).

(3)In the case where an acquired corporation, etc. and an acquiring corporation, etc. involved in a qualified merger, etc. (in the case where the acquiring corporation, etc. is a corporation established as a result of the qualified merger, etc., another acquired corporation, etc. involved in the qualified merger, etc.; the same applies in item (i)) have a specified capital relationship (meaning a relationship whereby one of the corporations directly or indirectly holds 50 percent or more of the total number or total amount of the other corporation's issued shares or capital contributions (excluding the shares that the second corporation holds in itself and the capital contributions made thereby) or any other relationship as specified by Cabinet Order; hereinafter the same applies in this paragraph and paragraph (5)), and the specified capital relationship occurred on or after the day five years prior to the first day of the business year of the merger, etc. pertaining to the qualified merger, etc. of the acquiring corporation, etc., when the qualified merger, etc. does not fall under the category that is specified by Cabinet Order as a qualified merger, etc. for the purpose of conducting business jointly, the amount of unappropriated loss prescribed in the preceding paragraph does not include the following loss of the acquired corporation, etc.:

(4)With regard to the application of the provisions of paragraph (1) in each business year of a splitting corporation involved in a quasi-merger qualified company split by split-off after the business year containing the date of the quasi-merger qualified company split by split-off, the net operating loss that arose in each business year prior to the business year is deemed not to exist.

(5)In the case where a qualified merger, qualified company split, or qualified contribution in kind (hereinafter referred to as a "qualified merger, etc." in this paragraph) has been effected between a domestic corporation set forth in paragraph (1) and a corporation with a specified capital relationship (meaning a corporation that has a specified capital relationship with the domestic corporation; hereinafter the same applies in this paragraph), with the domestic corporation as an acquiring corporation, succeeding corporation in a company split, or corporation receiving a capital contribution in kind, and the specified capital relationship occurred on or after the day five years prior to the first day of the business year containing the date of the qualified merger, etc. (hereinafter referred to as the "business year of the merger, etc." in this paragraph) of the domestic corporation, when the qualified merger, etc. does not fall under the category that is specified by Cabinet Order as a qualified merger, etc. for the purpose of conducting business jointly, with regard to the application of the provisions of paragraph (1) in each business year of the domestic corporation after the business year of the merger, etc., the following loss out of the amount of the domestic corporation's loss prescribed in the paragraph (including the amount deemed to be the amount of the domestic corporation's loss under paragraph (2) or the following paragraph and excluding the amount deemed not to exist under this paragraph or paragraph (9); hereinafter the same applies in this paragraph) is deemed not to exist:

(6)In the case where a domestic corporation has effected a company split by split-off with the domestic corporation as a splitting corporation (limited to a company split by split-off that the domestic corporation, which is a consolidated corporation, effects during the period from the day following the first day of the consolidated parent corporation's business year (meaning the consolidated parent corporation's business year prescribed in Article 15-2, paragraph (1) (Meaning of Consolidated Business Year); hereinafter the same applies in this paragraph and paragraph (9)) to the last day thereof), or in the case where a domestic corporation has had the approval set forth in Article 4-2 (Consolidated Taxpayer) rescinded pursuant to the provisions of Article 4-5, paragraph (2) (Rescission of Approval for Consolidated Taxation) (with regard to a consolidated parent corporation, excluding the case where it has had the approval rescinded as a result of having effected a merger with the consolidated parent corporation as an acquired corporation, and with regard to a consolidated subsidiary corporation, excluding the case where it has had the approval rescinded as a result of having effected a merger with the consolidated subsidiary corporation as an acquired corporation as of the first day of the consolidated parent corporation's business year), or where a domestic corporation has obtained approval set forth in Article 4-5, paragraph (3) (hereinafter referred to as the "case of the rescission, etc. of approval" in this paragraph), when there is any individually attributed amount of consolidated operating loss (meaning the individually attributed amount of consolidated operating loss prescribed in Article 81-9, paragraph (5) (Carryover of Consolidated Operating Loss); hereinafter the same applies in this paragraph and the following paragraph) of the domestic corporation that arose in each business year starting within seven years prior to the first day of the business year containing the day preceding the date of the company split by split-off or in each consolidated business year starting within seven years prior to the first day of the business year containing the day following the last day of the final consolidated business year in the case of the rescission, etc. of approval, with regard to the application of the provisions of paragraph (1) in each business year after the business year containing the preceding day or the business year containing the following day, the individually attributed amount of consolidated operating loss is deemed to be the net operating loss that arose in the domestic corporation's business year that contains the first day of the consolidated business year in which the individually attributed amount of consolidated operating loss arose.

(7)In the case where an acquired corporation involved in a qualified merger is a consolidated corporation (with regard to a consolidated subsidiary corporation, limited to a consolidated subsidiary corporation that effects a qualified merger, with itself as an acquired corporation, as of the day following the last day of a consolidated business year) or where a splitting corporation involved in a quasi-merger qualified company split by split-off is a consolidated corporation (limited to a consolidated corporation that effects a quasi-merger qualified company split by split-off, with itself as a splitting corporation, as of the day following the last day of its consolidated business year), the provisions of paragraph (2) and paragraph (3) apply by deeming the individually attributed amount of consolidated operating loss of such consolidated corporation that arose in each consolidated business year starting within seven years prior to the date of the qualified merger or quasi-merger qualified company split by split-off of such consolidated corporation to be the net operating loss that arose in a business year within preceding seven years as prescribed in paragraph (2), deeming a consolidated tax return to be a blue return, and deeming the consolidated business year in which the individually attributed amount of consolidated operating loss arose to be the business year of the acquired corporation or splitting corporation.

(8)In the case prescribed in the preceding paragraph, when a consolidated corporation that becomes an acquired corporation or splitting corporation involved in a qualified merger or quasi-merger qualified company split by split-off set forth in the paragraph shows any net operating loss that arose in each business year prior to each consolidated business year, as prescribed in the paragraph, that falls under a business year within preceding seven years as prescribed in paragraph (2), the provisions of the paragraph do not apply to the net operating loss.

(9)In the case falling under any of the following cases, with regard to the application of the provisions of paragraph (1) in a business year listed in the relevant item of a domestic corporation set forth in the paragraph, the net operating loss prescribed in the relevant item is deemed not to exist:

(10)In the case where a domestic corporation which is a consolidated subsidiary corporation falls under any of the following cases in the single consolidated corporation's business year (in the case where the domestic corporation has effected a company split by split-off (excluding those listed in item (i), (a) or (c) of the preceding paragraph) with itself as a splitting corporation, meaning the business year containing the day preceding the date of the company split by split-off, and in the case where the domestic corporation has had the approval set forth in Article 4-2 rescinded under Article 4-5, paragraph (2) (limited to the part pertaining to item (iv) or item (v)), meaning the business year containing the day preceding the date of the rescission), the provisions prescribed in each of the following items do not apply to the net operating loss listed in the relevant item:

(11)The provisions of paragraph (1) apply only in the case where the domestic corporation set forth in the paragraph filed a final return with a blue return for the business year in which the net operating loss (excluding the amount deemed to be the net operating loss of the domestic corporation under paragraph (2) or paragraph (6)) arose and filed a tax return thereafter on a continuous basis (in the case of applying the provisions of paragraph (1) to the amount deemed to be the net operating loss of the domestic corporation under paragraph (2) or paragraph (6), only in the case where the domestic corporation filed a tax return for the business year containing the day following the last day of the business year of the merger, etc. set forth in paragraph (2) or the final consolidated business year prescribed in paragraph (6) and filed a tax return thereafter on a continuous basis).

(12)In the case where the acquiring corporation, etc. set forth in paragraph (2) is a corporation that was established as a result of a qualified merger, etc. as set forth in the paragraph, necessary matters concerning the application of the provisions of paragraph (1) and the application of the other provisions of the paragraph to paragraph (10) are specified by Cabinet Order.

Article 57-2(1)In the case where a domestic corporation that has become subject to a specified controlling interest of a second person (meaning a relationship whereby the second person holds directly or indirectly 50 percent or more of the total number or the total amount of the issued shares of or capital contributions to the domestic corporation (excluding the shares that the domestic corporation holds in itself and the capital contributions made thereby) or any other relationship as specified by Cabinet Order and excluding a relationship that occurred on any grounds specified by Cabinet Order; hereinafter the same applies in this paragraph) and that holds, in the business year containing the day on which the domestic corporation became subject to the specified controlling interest (hereinafter such day is referred to as the "day on which it became subject to control" and such business year is referred to as a "business year under specified controlling interest" in this paragraph), the net operating loss that arose in each business year prior to the business year under specified controlling interest (such net operating loss is include the amount which was deemed to be the net operating loss of the domestic corporation under paragraph (2) or paragraph (6) of the preceding Article and is limited to the amount to which the provisions of paragraph (1) of the Article apply; hereinafter the same applies in this Article) or assets with a valuation loss (meaning assets held by the domestic corporation as of the day it became subject to control which are specified by Cabinet Order as those whose value as of the day on which the corporation became subject to control does not reach their book value) (such domestic corporation includes a corporation that was a consolidated corporation showing a loss, etc. as prescribed in Article 81-9-2, paragraph (1) (Non-application of the Carryover of Consolidated Operating Losses for a Consolidated Corporation Showing a Loss, etc. That Is Controlled by Specified Shareholders, etc.) (hereinafter referred to as a "consolidated corporation showing a loss, etc." in this Article) as of the last day of the last consolidated business year when it had corporation tax imposed on its consolidated income for each consolidated business year; hereinafter such domestic corporation is referred to as a "corporation showing a loss, etc." in this Article) falls under any of the following circumstances, up to the day preceding the day on which five years have elapsed since the day that the corporation became subject to control (in the case of the consolidated corporation showing a loss, etc., from the day specified by Cabinet Order; hereinafter such day is referred to as the "specified day on which the corporation became subject to control" in this paragraph and item (i) of the following paragraph) (in the case where the corporation showing a loss, etc. falls under the case specified by Cabinet Order as a case where it has ceased to be subject to the specified controlling interest, a release from an obligation as specified by Cabinet Order or other acts (referred to as a "release from an obligation" in item (iii)) have been made for obligation of the corporation showing a loss, etc., or any other events as specified by Cabinet Order have occurred, up to the day on which those events occurred), the provisions of paragraph (1) of the preceding Article do not apply to the net operating loss that arose in each business year prior to the business year containing the day on which the corporation showing a loss, etc. came to fall under any of the following circumstances (in the case where the corporation showing a loss, etc. falls under any of the circumstances listed in item (iv), containing the day preceding a qualified merger, etc. as prescribed in the item; such day is referred to as the "relevant day" in the following paragraph) (hereinafter such business year containing the relevant day is referred to as the "applicable business year" in this Article) in each business year after the applicable business year:

(2)In the case where a corporation showing a loss, etc. effects a merger, company split, or contribution in kind to the capital of the receiving corporation on or after the relevant day (including the relevant day prescribed in Article 81-9-2, paragraph (1)), the provisions prescribed in each of the following items do not apply to the net operating loss or individually attributed amount of consolidated operating loss (meaning the individually attributed amount of consolidated operating loss prescribed in paragraph (6) of the preceding Article; hereinafter the same applies in this Article) listed in the relevant item:

(3)In the case where a consolidated corporation showing a loss, etc. effects a company split by split-off as prescribed in paragraph (6) of the preceding Article on or after the relevant day prescribed in Article 81-9-2, paragraph (1), or falls under the case of the rescission, etc. of the approval prescribed in paragraph (6) of the preceding Article, the provisions of the paragraph do not apply to the individually attributed amount of consolidated operating loss that arose in each consolidated business year prior to the applicable consolidated business year of the consolidated corporation showing a loss, etc.

(4)In the case where a qualified merger, etc. is effected between a domestic corporation and a corporation showing a loss, etc. or a consolidated corporation showing a loss, etc., with the domestic corporation as an acquiring corporation or succeeding corporation in a company split, the provisions of paragraph (2), paragraph (3), and paragraph (7) of the preceding Article do not apply to the net operating loss or individually attributed amount of consolidated operating loss that arose in each business year or each consolidated business year prior to the applicable business year or applicable consolidated business year of the corporation showing a loss, etc. or consolidated corporation showing a loss, etc.

(5)Necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

Article 58(1)When a domestic corporation that files a tax return shows any net operating loss that arose in a business year starting within seven years prior to the first day of each of its business years (such amount excludes the amount to which the provisions of Article 57, paragraph (1) (Carryover of Losses in a Business Year When a Blue Return Has Been Filed) or Article 80 (Refund by Carryback of Loss) apply) and such net operating loss includes any amount specified by Cabinet Order that relates to the loss of inventories, fixed assets or deferred assets specified by Cabinet Order that was caused by an earthquake, storm and flood, fire or any other disaster as specified by Cabinet Order (hereinafter referred to as the " net operating loss caused by a disaster" in this Article), the amount equivalent to the net operating loss caused by a disaster is included in deductible expenses, when calculating the amount of income for the relevant each business year; provided, however, that in the case where the amount equivalent to the net operating loss caused by a disaster exceeds the amount of income for each relevant business year calculated without applying the provisions of the main clause to the loss (in the case where there is any amount which is equivalent to any loss that had arisen in a business year prior to the business year when the net operating loss caused by a disaster arose and which is to be included in deductible expenses when calculating the amount of income for each relevant business year under the main clause or Article 57, paragraph (1), exceeds the amount that remains after deducting the amount to be included in deductible expenses from the calculated income), the provisions of the main clause do not apply to the amount of the excess.

(2)In the case where a qualified merger, etc. (meaning a qualified merger or what is specified by Cabinet Order as a company split by split-off categorized into a merger that falls under the category of a qualified company split by split-off (hereinafter referred to as a "quasi-merger qualified company split by split-off" in paragraph (3)); hereinafter the same applies in this Article) has been effected, when an acquired corporation or splitting corporation (hereinafter referred to as a "acquired corporation, etc." in this paragraph) involved in the qualified merger, etc. shows any net operating loss caused by a disaster that arose in each business year starting within seven years prior to the date of the qualified merger, etc. (hereinafter referred to as a "business year within preceding seven years") (such amount is limited to the net operating loss caused by a disaster only in the case where the acquired corporation, etc. has filed a tax return containing a detailed statement concerning the calculation of the net operating loss prescribed in paragraph (6) for the business year within preceding seven years when the loss arose or meets any other requirements as specified by Cabinet Order, and excludes the amount included in deductible expenses when calculating the amount of income for a business year within preceding seven years of the acquired corporation, etc. under the preceding paragraph; hereinafter referred to as the "amount of unappropriated loss caused by a disaster" in this paragraph), with regard to the application of the provisions of the preceding paragraph in each business year after the business year containing the date of the qualified merger, etc. (hereinafter referred to as the "business year of the merger, etc." in this paragraph) of an acquiring corporation or succeeding corporation in a company split (hereinafter referred to as a "acquiring corporation, etc." in this paragraph) involved in the qualified merger, etc., the amount of unappropriated loss caused by a disaster that arose in the business year within preceding seven years is deemed to be the net operating loss caused by a disaster that arose in each business year of the acquiring corporation, etc. containing the first day of the business years within preceding seven years when the amount of respective unappropriated loss caused by a disaster arose (or the amount of unappropriated loss caused by a disaster that arose in the business year within preceding seven years of the acquired corporation, etc. starting on or after the first day of the business year of the merger, etc. of the acquiring corporation, etc. is deemed to be the net operating loss caused by a disaster that arose in the business year preceding the business year of the merger, etc.).

(3)With regard to the application of the provisions of paragraph (1) in each business year of a splitting corporation involved in a quasi-merger qualified company split by split-off after the business year containing the date of the quasi-merger qualified company split by split-off, the net operating loss caused by a disaster that arose in each business year prior to the business year is deemed not to exist.

(4)In the case prescribed in any of the following items, with regard to the application of the provisions of paragraph (1) in a business year listed in the relevant item of a domestic corporation set forth in the paragraph, the net operating loss caused by a disaster as prescribed in the relevant item is deemed not to exist:

(5)In the case where the domestic corporation, which is a consolidated subsidiary corporation, has effected a qualified merger, etc. (limited to a qualified merger, etc., wherein a corporation which does not have a consolidated full controlling interest in the domestic corporation (excluding a corporation specified by Cabinet Order as a corporation that shows any loss caused by a disaster deemed to be the amount of consolidated operating loss; hereinafter referred to as an "uncontrolled corporation" in this paragraph) is an acquired corporation, etc. as prescribed in paragraph (2)) with itself as an acquiring corporation, etc. as prescribed in the paragraph in the single consolidated corporation's business year prescribed in Article 57, paragraph (10), the provisions of paragraph (2) do not apply to the amount of unappropriated loss caused by a disaster as prescribed in the paragraph of the uncontrolled corporation.

(6)The provisions of paragraph (1) apply only in the case where a domestic corporation set forth in the paragraph filed a tax return containing a detailed statement concerning the calculation of the net operating loss prescribed in paragraph (1) for the business year in which the net operating loss arose caused by a disaster (excluding the amount deemed to be the net operating loss caused by a disaster of the domestic corporation under paragraph (2)) arose and filed a tax return thereafter on a continuous basis (in the case of applying the provisions of paragraph (1) to the amount deemed to be the net operating loss caused by a disaster of the domestic corporation under paragraph (2), only in the case where the domestic corporation filed a tax return for the business year of the merger, etc. set forth in paragraph (2) and filed a tax return thereafter on a continuous basis).

(7)In the case where an acquiring corporation, etc. set forth in paragraph (2) is a corporation established as a result of a qualified merger, etc., necessary matters concerning the application of the provisions of paragraph (1) and the application of other provisions of the paragraph to paragraph (5) are specified by Cabinet Order.

Article 59(1)In the case where an order on the commencement of reorganization proceedings has been rendered against a domestic corporation under the Corporate Reorganization Act or the Act on Special Measures, etc. of Reorganization Procedure of Financial Institutions (referred to as the "Corporate Reorganization Act, etc." in item (iii)), when the domestic corporation falls under any of the following cases, the portion of the net operating loss that arose in each business year prior to the business year containing the day on which the domestic corporation came to fall under the relevant case (hereinafter referred to as the "applicable year" in this paragraph) (such net operating loss includes the amount of individual loss prescribed in Article 81-18, paragraph (1) (Calculation of Individually Attributed Amount of Consolidated Corporation Tax) that arose in a consolidated business year (in the case where any consolidated operating loss arose in the consolidated business year, such amount plus the portion of the consolidated operating loss attributed to the domestic corporation)) and that is equivalent to the amount specified by Cabinet Order, up to the sum of the amount prescribed in the relevant item, is included in deductible expenses, when calculating the amount of income for the applicable year:

(2)In the case where an order on the commencement of rehabilitation proceedings has been rendered for a domestic corporation under the Civil Rehabilitation Act or any equivalent event as specified by Cabinet Order has occurred, when the domestic corporation falls under any of the following cases, the portion of the net operating loss that arose in each business year prior to the business year containing the day on which the domestic corporation came to fall under the relevant case (in the case of falling under the case listed in item (iii), prior to the business year in which the domestic corporation came to fall under such case; hereinafter such business year is referred to as the "applicable year" in this paragraph) (such net operating loss includes the amount of individual loss prescribed in Article 81-18, paragraph (1) that arose in a consolidated business year (in the case where any consolidated operating loss arose in the consolidated business year, such amount plus the portion of the consolidated operating loss attributed to the domestic corporation)) and that is equivalent to the amount specified by Cabinet Order, up to the sum of the amount prescribed in the relevant item (in the case where such sum exceeds the amount of income for the applicable year calculated without applying the provisions of this paragraph (in the case of falling under the case listed in item (iii), without applying the provisions of Article 57, paragraph (1) (Carryover of Losses in a Business Year When a Blue Return Has Been Filed), paragraph (1) of the preceding Article and this paragraph), the amount obtained after deducting the amount of the excess), is included in deductible expenses, when calculating the amount of income for the applicable year:

(3)The provisions of the preceding two paragraphs apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount equivalent to the net operating loss prescribed in these provisions and is attached with documents as specified by Ordinance of the Ministry of Finance.

(4)Even in the case where a tax return without entries for the matters or the attachment of documents set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1) or paragraph (2), when they find any unavoidable grounds for the person's failure to make entries of such statement or to attach such documents.

Article 60(1)The amount that an insurance company as prescribed in the Insurance Business Act distributes to its policyholders in each business year based on an insurance contract is included in deductible expenses, when calculating the amount of income for the business year; provided, however, that the amount exceeds the amount specified by Cabinet Order, this does not apply to the amount of the excess.

(2)The insurance company set forth in the preceding paragraph must attach to a tax return the documents containing a detailed statement concerning the calculation of the amount to be included in deductible expenses under the paragraph.

Article 60-2(1)The following amounts for which a cooperative, etc. makes a resolution to pay at the time of settling the accounts for each business year are included in deductible expenses, when calculating the amount of income of for the business year:

(2)The provisions of the preceding paragraph apply only in the case where a tax return contains a detailed statement concerning the inclusion in deductible expenses of the amount listed in the items of the paragraph.

(3)Even in the case where a tax return without entries for the matters set forth in the preceding paragraph has been filed, the district director of the tax office may apply the provisions of paragraph (1), when they find any unavoidable grounds for the person's failure to make entries for such matters.

Article 60-3(1)With regard to a corporation showing a loss, etc. as prescribed in Article 57-2, paragraph (1) (Non-application of the Carryover of Losses for a Corporation Showing a Loss, etc. That Is Controlled by Specified Shareholders, etc.) (with regard to a consolidated corporation showing a loss, etc. as prescribed in the paragraph, limited to such a corporation that held assets with a valuation loss as prescribed in Article 81-9-2, paragraph (1) (Non-application of the Carryover of Consolidated Operating Losses by a Consolidated Corporation Showing a Loss, etc. That Is Controlled by Specified Shareholders, etc.) as of the specified day on which it became subject to control prescribed in Article 57-2, paragraph (1); hereinafter such corporation is referred to as a "corporation showing a loss, etc." in this paragraph and the following paragraph), in the case where, during the period from the first day of the applicable business year prescribed in Article 57-2, paragraph (1) or applicable consolidated business year prescribed in Article 81-9-2, paragraph (1) (hereinafter referred to as the "applicable business year, etc." in this paragraph) of the corporation showing a loss, etc. until the day on which three years have elapsed since the first day (in the case where the day on which three years have elapsed falls after the day on which five years have elapsed since the specified day on which the corporation became subject to control, the period until the day on which five years have elapsed), (in the case where each business year ending during the period is subject to the provisions of Article 61-11, paragraph (1) (Gains or Losses on the Fair Valuation of Assets Accompanying the Commencement of Consolidated Taxation), Article 61-12, paragraph (1) (Gains or Losses on the Fair Valuation of Assets Accompanying Participation in Consolidated Taxation), or Article 62-9, paragraph (1) (Gains or Losses on the Fair Valuation of Assets Held by a Wholly Owned Subsidiary Corporation Involved in Non-qualified Share Exchange), during the period from the first day of the applicable business year, etc. until the last day of the business year immediately prior to the commencement of the consolidation prescribed in Article 61-11, paragraph (1), the business year immediately prior to participation in the consolidation prescribed in Article 61-12, paragraph (1), or the business year subject to the provisions of Article 62-9, paragraph (1); hereinafter referred to as the "applicable period" in this paragraph and the following paragraph), any net operating loss arises due to a transfer, revaluation, bad debts, removal, or any other equivalent grounds (hereinafter referred to as "specified grounds such as transfer" in this paragraph) of specified assets (meaning the portion specified by Cabinet Order of assets held by the corporation showing a loss, etc. as of the specified day on which it became subject to control and assets transferred to the corporation showing a loss, etc. as a result of a qualified company split or qualified contribution in kind, wherein the second person as prescribed in Article 57-2, paragraph (1) is a splitting corporation or corporation making a capital contribution in kind, or as a result of a qualified merger, qualified company split, or qualified contribution in kind, wherein a related person as prescribed in item (iii) of the paragraph is an acquired corporation, splitting corporation, or corporation making a capital contribution in kind; hereinafter the same applies in this Article), the net operating loss (in the case where there are any profits resulting from a transfer or revaluation of specified assets that arise during the applicable period of the business year containing the day on which the specified grounds such as the transfer occurred, the amount that remains after deducting the amount of profits) is excluded from deductible expenses, when calculating the amount of income of the corporation showing a loss, etc. for each business year.

(2)In the case where a corporation showing a loss, etc. has transferred its specified assets (limited to those falling under the category of assets with a valuation loss as prescribed in Article 57-2, paragraph (1)), as a result of a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified organizational restructuring" in this Article), wherein the corporation itself is an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or transferring corporation, to a merging corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (hereinafter referred to as a "acquiring corporation, etc." in this Article), the provisions of the preceding paragraph apply by deeming that the acquiring corporation, etc. is a corporation showing a loss, etc. subject to the provisions of the paragraph.

(3)Necessary matters concerning the calculation of the net operating loss on the transfer of specified assets that an acquiring corporation set forth in the preceding paragraph has received as a result of a qualified organizational restructuring and other necessary matters concerning the application of the provisions of paragraph (1) are specified by Cabinet Order.

Article 61(1)In the case where a domestic corporation has transferred any commodities for short-term trading (meaning commodities as specified by Cabinet Order as assets acquired for the purpose of profit from short-term price fluctuations (excluding securities); hereinafter the same applies in this Article) (excluding the case where the commodities for short-term trading have been transferred to an acquiring corporation, succeeding corporation in a company split, or corporation receiving a capital contribution in kind as a result of a merger, company split, or qualified contribution in kind; hereinafter the same applies in this paragraph), capital gain (meaning the difference between the amount listed in item (i) and the amount listed in item (ii) when the former exceeds the latter) or capital loss (meaning the difference between the amount listed in item (i) and the amount listed in item (ii) when the latter exceeds the former) on the transfer is included in gross profits or deductible expenses, when calculating the amount of income for the business year containing the day on which a contract for the transfer was concluded:

(2)With regard to commodities for short-term trading held by a domestic corporation as of the end of a business year, the amount evaluated by the fair value method (meaning the method by categorizing commodities for short-term trading held as of the end of a business year by type and brand (hereinafter referred to as "types, etc." in this paragraph) and calculating the current value of commodities of the same type as specified by Cabinet Order, and thereby to deem the calculated amount to be their fair value at that time (referred to as the "fair value" in the following paragraph)) is to be their fair value at that time.

(3)In the case where a domestic corporation holds any commodities for short-term trading as of the end of a business year, the valuation gain therefrom (meaning, in the case where the fair value of the commodities for short-term trading exceeds their book value at that time (hereinafter referred to as the "book value at the end of the period" in this paragraph), the amount of the excess) or the valuation loss therefrom (meaning, in the case where the book value at the end of the period of the commodities for short-term trading exceeds their fair value, the amount of the excess) is included in gross profits or deductible expenses, when calculating the amount of income for the business year, notwithstanding the provisions of Article 25, paragraph (1) (Exclusion of Asset Valuation Gains from Gross Profits) or Article 33, paragraph (1) (Exclusion of Asset Valuation Losses, etc. from Deductible Expenses).

(4)In the case where a domestic corporation holds any commodities for short-term trading, when it has abolished all of the operations to buy and sell commodities for short-term trading for the purpose prescribed in paragraph (1), the amount of income of the domestic corporation for each business year is calculated by deeming that the domestic corporation transferred, as of the time of the abolition, the commodities for short-term trading for their value at that time and acquired assets other than commodities for short-term trading for their value.

(5)Methods for calculating the acquisition cost that is to be used as the basis of the calculation of book values per unit of commodities for short-term trading, the type of methods for calculating book values per unit of commodities for short-term trading, procedures to select the calculation methods, disposition of valuation gain or loss prescribed in paragraph (3) in the following business year, and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

Article 61-2(1)In the case where a domestic corporation has transferred any securities (excluding the case where the securities have been transferred to an acquiring corporation, succeeding corporation in a company split, or corporation receiving a capital contribution in kind as a result of a merger, company split, or qualified contribution in kind; hereinafter the same applies in this Article), capital gain (meaning the difference between the amount listed in item (i) and the amount listed in item (ii) when the former exceeds the latter) or capital loss (meaning the difference between the amount listed in item (i) and the amount listed in item (ii) when the latter exceeds the former) on the transfer is included in gross profits or deductible expenses, when calculating the amount of income for the business year containing the day on which a contract for the transfer was concluded (in the case where the transfer was due to payment of a dividend of surplus or on any other grounds specified by Ordinance of the Ministry of Finance, containing the day on which the dividend of surplus became effective or any other day as specified by the Ordinance of the Ministry of Finance):

(2)In the case where a domestic corporation has received the delivery of old shares (meaning shares (including capital contributions; hereinafter the same applies in this Article) held by the domestic corporation) as a result of a merger of the corporation that had issued the old shares (such merger is limited to a merger in which shareholders, etc. of the corporation have not received the delivery of assets other than either of an acquiring corporation's shares or shares of a corporation that has a relationship with an acquiring corporation as specified by Cabinet Order as a relationship whereby the corporation holds the whole of the issued shares of or capital contributions to the acquiring corporation (excluding the shares that the acquiring corporation holds in itself and the capital contributions made thereby; hereinafter referred to as "issued shares, etc." in this Article) (such assets exclude monies or other assets delivered as dividends, etc. of surplus to the shareholders, etc. and monies or other assets to be delivered to the shareholders, etc. who oppose the merger as the consideration based on their demand that their shares be purchased from them as prescribed in Article 2, item (xii)-8 (Definitions)), with regard to the application of the provisions of the preceding paragraph, the amount listed in item (i) of the paragraph is deemed to be the amount equivalent to the book value of the old shares as of immediately prior to the merger.

(3)The provisions of the preceding two paragraphs apply by deeming that an acquiring corporation has received the allotment of shares, etc. as prescribed in Article 24, paragraph (2) for its tie-in shares prescribed in the paragraph even in the case prescribed in the paragraph.

(4)In the case where a domestic corporation has received, as a result of a company split by split-off effected by the corporation that had issued old shares (meaning shares held by the domestic corporation; hereinafter the same applies in this paragraph), the delivery of shares of the succeeding corporation in a company split or other assets, the provisions of paragraph (1) apply by deeming that the domestic corporation has transferred the portion of the old shares corresponding to the assets and liabilities transferred to the succeeding corporation in a company split as a result of the company split by split-off. In this case, with regard to the application of the provisions of paragraph (1) where the domestic corporation has received the delivery of shares of the succeeding corporation in a company split or other assets, as a result of the company split by split-off (excluding a company split by split-off in which the shareholders, etc. of a splitting corporation have not received the delivery of assets other than either of the shares of a succeeding corporation in a company split or the shares of a corporation that has a relationship with a succeeding corporation in a company split as specified by Cabinet Order as a relationship whereby the corporation holds the whole of the issued shares, etc. of the succeeding corporation in a company split (hereinafter referred to as the "parent corporation" in this paragraph) (such assets exclude monies or other assets other than assets as a consideration for a split as prescribed in Article 2, item (xii)-9 that have been delivered as dividends, etc. of surplus as prescribed in item (xii)-8 of the Article to the shareholders, etc.) (hereinafter such company split by split-off is referred to as a "company split by split-off without delivery of monies, etc." in this paragraph)), the amount listed in paragraph (1), item (ii) is deemed to be the amount calculated, as specified by Cabinet Order, based on the book value of the old shares as of immediately prior to the company split by split-off (hereinafter such calculated amount is referred to as the "book value corresponding to split net assets"); and with regard to the application of paragraph (1) where the domestic corporation has received the delivery of shares of the succeeding corporation in a company split or shares of the parent corporation, as a result of the company split by split-off (limited to a company split by split-off without the delivery of monies, etc.), the amounts listed in the items of paragraph (1) is deemed to be the book values corresponding to split net assets of the old shares as of immediately prior to the company split by split-off.

(5)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation is deemed to have delivered shares or the acquiring parent corporation's shares as prescribed in Article 62-2, paragraph (2) (Succession of Assets, etc. at Book Value as a Result of Qualified Merger and Qualified Company Split by Split-Off) to the shareholders, etc. prescribed in the paragraph as prescribed in the paragraph, the amounts listed in the items of paragraph (1) are deemed to be the amounts equivalent to those specified by Cabinet Order as prescribed in paragraph (2) of the Article.

(6)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has delivered, as a result of a qualified company split by split-off with itself as a splitting corporation, shares of a succeeding corporation in a company split involved in the qualified company split by split-off or shares of a succeeding parent corporation in a company split as prescribed in Article 2, item (xii)-11 (referred to as "shares of a succeeding parent corporation in a company split" in paragraph (8)) to its shareholders, etc., the amounts listed in the items of paragraph (1) are deemed to be the amounts equivalent to those specified by Cabinet Order as prescribed in Article 62-2, paragraph (3).

(7)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has delivered, as a result of a qualified merger with itself as an acquiring corporation, the acquiring parent corporation's shares as prescribed in Article 2, item (xii)-8, the amount listed in paragraph (1), item (i) is deemed to be the amount equivalent to the book value of the acquiring parent corporation's shares as of immediately prior to the qualified merger.

(8)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has delivered, as a result of a qualified company split with itself as a succeeding corporation in a company split, shares of a succeeding parent corporation in a company split, the amount listed in paragraph (1), item (i) is deemed to be the amount equivalent to the book value of the shares of a succeeding parent corporation in a company split as of immediately prior to the qualified company split.

(9)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has received, as a result of a share exchange effected by the corporation that had issued old shares (meaning shares held by the domestic corporation) (such share exchange excludes a share exchange in which the shareholders, etc. of the corporation have not received the delivery of assets other than either of the shares of a wholly owning parent corporation in a share exchange or the shares of a corporation that has a relationship with a wholly owning parent corporation in a share exchange as specified by Cabinet Order as a relationship whereby the corporation holds the whole of the issued shares, etc. of the wholly owning parent corporation in a share exchange (such assets exclude monies or other assets delivered as a dividend of surplus to the shareholders and monies or other assets to be delivered to the shareholders who oppose the share exchange as the consideration based on their demand that their shares be purchased from them)), the delivery of the shares, the amount listed in paragraph (1), item (i) is deemed to be the amount equivalent to the book value of the old shares as of immediately prior to the share exchange.

(10)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has delivered, as a result of a qualified share exchange with itself as a wholly owning parent corporation in a share exchange, shares of a wholly owning parent corporation in a share exchange as prescribed in Article 2, item (xii)-16, the amount listed in paragraph (1), item (i) is deemed to be the amount equivalent to the book value of the shares of a wholly owning parent corporation as of immediately prior to the share exchange.

(11)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has received, as a result of a share transfer effected by the corporation that had issued old shares (meaning shares held by the domestic corporation) (such share transfer excludes a share transfer in which the shareholders, etc. of the corporation have not received the delivery of assets other than shares of a wholly owning parent corporation in a share transfer (such assets exclude monies or other assets to be delivered to the shareholders who oppose the share transfer as the consideration based on their demand that their shares be purchased from them)), the delivery of the shares, the amount listed in paragraph (1), item (i) is deemed to be the amount equivalent to the book value of the old shares as of immediately prior to the share transfer.

(12)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has received, as a result of a merger, company split, share exchange or share transfer (hereinafter referred to as a "merger, etc." in this paragraph), wherein the corporation, which had issued share options (including bonds with share options; hereinafter referred to as "old share options, etc." in this paragraph) that the domestic corporation holds, is an acquired corporation, splitting corporation, wholly owned subsidiary corporation in a share exchange, or wholly owned subsidiary corporation in a share transfer, the delivery of only share options (including bonds with share options) of an acquiring corporation, succeeding corporation in a company split, wholly owning parent corporation in a share exchange, or wholly owning parent corporation in a share transfer, in lieu of the old share options involved in the merger, etc., the amount listed in paragraph (1), item (i) is deemed to be the amount equivalent to the book value of the old share options as of immediately prior to the merger, etc.

(13)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has received, upon an entity conversion effected by the corporation that had issued old shares (meaning shares held by the domestic corporation) (such entity conversion is limited to that in which only shares of the corporation have been delivered to its shareholders, etc.), the delivery of shares of the corporation, the amount listed in paragraph (1), item (i) is deemed to be the amount equivalent to the book value of the old shares as of immediately prior to the organizational change.

(14)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has transferred securities as listed in the following items on any of the grounds prescribed in the relevant item and has received the delivery of the shares or share options of a corporation that has made the acquisition as prescribed in the relevant item on the grounds (excluding the case where it is deemed that the value of the shares or share options received is not close to the value of the transferred securities), the amount listed in paragraph (1), item (i) is deemed to be the amount equivalent to the book value of the securities listed in the relevant item as of immediately prior to the transfer (with regard to securities listed in item (iv), equivalent to the book value of the bonds with share options set forth in the item as of immediately prior to the transfer):

(15)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has received, as a result of the consolidation of trusts related to old beneficial rights (meaning beneficial rights of a group investment trust held by the domestic corporation) (such consolidation of trusts is limited to that in which beneficiaries of the group investment trust have not received the delivery of assets other than the beneficial rights of a new trust involved in the consolidation of trusts (such assets exclude monies or other assets to be delivered to the beneficiaries who oppose the consolidation of trusts as the consideration based on their demand that their shares be purchased from them)), the delivery of the beneficial rights, the amount listed in paragraph (1), item (i) is deemed to be the amount equivalent to the book value of the old beneficiary rights as of immediately prior to the consolidation of trusts.

(16)In the case where a domestic corporation has received, as a result of the split of a trust related to old beneficial rights (meaning the beneficial rights of a group investment trust held by the domestic corporation; hereinafter the same applies in this paragraph), the delivery of the beneficial rights of a succeeding trust (meaning a trust that receives the transfer of a part of the trust property of another trust holding the same trustee as a result of a trust split; hereinafter the same applies in this paragraph) or other assets, the provisions of paragraph (1) apply by deeming that the domestic corporation has transferred the portion of the old beneficial rights corresponding to the assets and liabilities transferred to the succeeding trust as a result of the trust split. In this case, with regard to the application of the provisions of paragraph (1) where the domestic corporation has received the delivery of the beneficial rights of a succeeding trust or other assets, as a result of the trust split (limited to a trust split in which beneficiaries of the split trust (meaning a trust that transfers, as a result of a trust split, a part of its trust property as the trust property of another trust holding the same trustee or a new trust) have received the delivery of assets other than the beneficial rights of a succeeding trust (such assets exclude monies or other assets to be delivered to the beneficiaries who oppose the trust split as the consideration based on their demand that their shares be purchased from them) (hereinafter such trust split is referred to as a "trust split with delivery of monies, etc." in this paragraph)), the amount listed in paragraph (1), item (ii)is deemed to be the amount calculated, as specified by Cabinet Order, based on the book value of the old beneficial rights as of immediately prior to the trust split (hereinafter such calculated amount is referred to as the "book value corresponding to split net assets"); and with regard to the application of paragraph (1) where the domestic corporation has received the delivery of the beneficial rights of a succeeding trust, as a result of the trust split (excluding a trust split with delivery of monies, etc.), the amounts listed in the items of paragraph (1) is deemed to be the book values corresponding to split net assets of the old beneficial rights as of immediately prior to the trust split.

(17)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has received the delivery of monies or other assets as a Return of the capital or the distribution of residual assets due to the dissolution of a corporation that had issued shares that the domestic corporation holds as prescribed in Article 24, paragraph (1), item (iii) (hereinafter referred to as a "refund, etc." in this paragraph), the amount listed in paragraph (1), item (ii) is deemed to be the amount calculated, as specified by Cabinet Order, based on the book value of the shares as of immediately prior to the refund, etc.

(18)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has received the delivery of monies or other assets as a Return of the capital contributions of a corporation that it holds (limited to capital contributions without any provisions concerning the number of units; hereinafter referred to as "owned capital contributions" in this paragraph) (hereinafter such refund is simply referred to as a "refund" in this paragraph), the amount listed in paragraph (1), item (ii) is deemed to be the amount equivalent to the amount obtained by multiplying the book value of the owned capital contributions as of immediately prior to the refund by the rate that the capital contributions pertaining to the refund accounts for among the amount of the owned capital contributions as of immediately prior to the refund.

(19)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has sold securities and has bought back securities of the same issue thereafter to complete a settlement by way of short selling (meaning a transaction wherein a person sells securities without holding them and buys back securities of the same issue thereafter to complete the settlement or other transactions specified by Ordinance of the Ministry of Finance and excluding those falling under the category of a margin transaction or a when issued transaction as prescribed in the following paragraph), the capital gain prescribed in the paragraph is deemed to be the difference between the amount listed in item (i) and the amount listed in item (ii) when the former exceeds the latter, the capital loss prescribed in the paragraph is deemed to be the difference between the amount listed in item (i) and the amount listed in item (ii) when the latter exceeds the former, and the day on which a contract for the transfer was concluded as prescribed in the paragraph is to be the day on which a buyback contract pertaining to the settlement was concluded:

(20)With regard to the application of the provisions of paragraph (1) in the case where a domestic corporation has sold or bought shares and has bought or sold shares of the same issue thereafter to complete settlement by way of a margin transaction as prescribed in Article 156-24, paragraph (1) (License and Application of License) of the Financial Instruments and Exchange Act or a when issued transaction (meaning a transaction wherein a person sells or buys securities prior to the issuance thereof and which is specified by Ordinance of the Ministry of Finance), the capital gain prescribed in the paragraph is to be the difference between the amount listed in item (i) and the amount listed in item (ii) when the former exceeds the latter, the capital loss prescribed in the paragraph is to be the difference between the amount listed in item (i) and the amount listed in item (ii) when the latter exceeds the former, and the day on which a contract for the transfer was concluded as prescribed in the paragraph is to be the day on which a contract for buying or selling pertaining to the settlement was concluded:

(21)In the case where a domestic corporation holds securities for buying and selling as prescribed in paragraph (1), item (i) of the following Article, securities which are STRIPS bonds as prescribed in Article 90, paragraph (1) (Definitions) of the Act on Transfer of Bonds, Shares, etc., or any other securities as specified by Cabinet Order (hereinafter referred to as "specified securities" in this paragraph), when the domestic corporation has abolished all of its operations to buy and sell securities for the purpose prescribed in the item, separate trading of principal and interest prescribed in paragraph (1) of the Article has been conducted, or any other events as specified by Cabinet Order have occurred, the amount of the income of the domestic corporation for each business year is calculated by deeming that the domestic corporation transferred the specified securities and acquired securities other than the specified securities as of the time when the events occurred, as specified by Cabinet Order.

(22)In the case where a domestic corporation intends to deliver, as a result of a merger, company split, or share exchange (hereinafter referred to as a "merger, etc." in this paragraph) with itself as the acquiring corporation, succeeding corporation in a company split, or wholly owning parent corporation in a share exchange, the parent corporation's shares (meaning the shares of a corporation that is expected to fall under the category of a corporation that has a relationship with the domestic corporation specified by Cabinet Order as a relationship whereby the corporation holds the whole of the issued shares, etc. of the domestic corporation, as of the day on which a contract for the merger, etc. is concluded (hereinafter referred to as the "contract date" in this paragraph); hereinafter the same applies in this paragraph), when the domestic corporation holds the parent corporation's shares as of the contract date or has received the transfer of the parent corporation's shares as a result of a qualified merger, wherein the domestic corporation is an acquiring corporation, or on any other grounds specified by Cabinet Order after the contract date, the amount of the income of the domestic corporation for each business year is calculated by deeming that the domestic corporation transferred such parent corporation's shares (excluding the equivalent number of shares specified by Cabinet Order as exceeding the number that the domestic corporation is expected to deliver; hereinafter the same applies in this paragraph) at their value as of the contract date or the day on which the domestic corporation received the transfer (hereinafter referred to as the "contract date, etc." in this paragraph) and acquired such parent corporation's shares at their value, as of the contract date, etc.

(23)Methods for calculating the acquisition cost that is to be used as the basis of the calculation of book values per unit of securities, the type of methods for calculating book values per unit of securities, procedures to select calculation methods, and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

Article 61-3(1)With regard to securities held by a domestic corporation as of the end of a business year, the amounts prescribed in the following items, in accordance with the category of the securities listed as follows, are to be their fair value at that time:

(2)In the case where a domestic corporation holds securities for buying and selling as of the end of a business year, the valuation gain therefrom (meaning, in the case where the fair value of the securities for buying and selling exceeds their book value at that time (hereinafter referred to as the "book value at the end of the period" in this paragraph), the amount of the excess) or a valuation loss therefrom (meaning, in the case where the book value at the end of the period of the securities for buying and selling exceeds their fair value, the amount of the excess) is included in gross profits or deductible expenses, when calculating the amount of income for the business year, notwithstanding the provisions of Article 25, paragraph (1) (Exclusion of Asset Valuation Gains from Gross Profits) or Article 33, paragraph (1) (Exclusion of Asset Valuation Losses from Deductible Expenses).

(3)Disposition of valuation gain or loss prescribed in the preceding paragraph in the next business year, and other necessary matters concerning the application of the provisions of the preceding two paragraphs are specified by Cabinet Order.

Article 61-4(1)In the case where a domestic corporation has conducted the short selling of securities prescribed in Article 61-2, paragraph (19) (Calculation of Capital Gain or Loss on Short Selling of Securities), the margin transaction prescribed in paragraph (20) of the Article (referred to as a "margin transaction" in the following paragraph), the when issued transaction prescribed in paragraph (20) of the Article (referred to as a "when issued transaction" in the following paragraph), or the underwriting of securities prescribed in Article 2, paragraph (8), item (vi) (Definitions) of the Financial Instruments and Exchange Act (excluding the underwriting of securities for the purpose of acquiring securities not for buying and selling as prescribed in paragraph (1), item (ii) of the preceding Article), when any of such transactions have not been settled as of the end of a business year, the amount equivalent to the profit or loss calculated, as specified by Ordinance of the Ministry of Finance, by deeming that such transactions were settled at that time, is included in gross profits or deductible expenses, when calculating the amount of income for the business year.

(2)In the case where a domestic corporation has acquired securities based on a contract for a margin transaction, etc. (meaning a margin transaction (limited to buying) and a when issued transaction (limited to buying); hereinafter the same applies in this paragraph) (excluding the case where the domestic corporation has acquired the securities based on a contract for a margin transaction, etc. subject to the provisions of Article 61-6, paragraph (1) (Deferment of Profit or Loss by Deferred Hedge Accounting)), the difference between the value of the securities as of the time of the acquisition and the amount that the domestic corporation paid as the consideration for the acquisition of the securities based on a contract for margin transactions, etc. that had caused the acquisition is included in gross profits or deductible expenses, when calculating the amount of income for the business year containing the date of the acquisition.

(3)The disposition of the amount equivalent to the profit or loss set forth in paragraph (1) in the next business year, and other necessary matters concerning the application of the provisions of the preceding two paragraphs are specified by Cabinet Order.

Article 61-5(1)In the case where a domestic corporation has conducted derivative transactions (meaning transactions promising the payment or receipt of the amount of monies calculated based on the difference between the numeric value, which has been agreed upon between the parties in advance as the interest rate, price of currency, price of goods or numeric value of another index, and the actual numeric value of such index at a certain time in the future, or transactions similar thereto, which are specified by Ordinance of the Ministry of Finance; hereinafter the same applies in this paragraph and the following paragraph), when any of those transactions have not been settled as of the end of a business year (excluding transactions based on a foreign exchange futures contract as prescribed in Article 61-8, paragraph (2) (Conversion of Transactions in a Foreign Currency with the Amount in Japanese Yen Determined under a Foreign Exchange Futures Contract, etc.) in the case where the provisions of the paragraph apply and other transactions specified by Ordinance of the Ministry of Finance; hereinafter referred to as "unsettled derivative transactions" in this paragraph), the amount equivalent to the profit or loss calculated, as specified by Ordinance of the Ministry of Finance, by deeming that the unsettled derivative transactions were settled at the time,is included in gross profits or deductible expenses, when calculating the amount of income for the business year.

(2)In the case where a domestic corporation has acquired assets other than monies based on a contract for derivative transactions (excluding the case where the domestic corporation has acquired the assets based on a contract for derivative transactions subject to the provisions of paragraph (1) of the following Article), the difference between the value of the assets as of the time of the acquisition and the amount that the domestic corporation paid as the consideration for the acquisition of the assets based on a contract for derivative transactions that had caused the acquisition is included in gross profits or deductible expenses, when calculating the amount of income for the business year containing the date of the acquisition.

(3)The disposition of the amount equivalent to the profit or loss set forth in paragraph (1) in the next business year, and other necessary matters concerning the application of the provisions of the preceding two paragraphs are specified by Cabinet Order.

Article 61-6(1)In the case where a domestic corporation has conducted derivative transactions, etc. so as to decrease the net operating loss listed as follows (hereinafter referred to as the " net operating loss on hedged assets, etc." in this paragraph and paragraph (3)) (excluding the case where the provisions of paragraph (1) of the next Article apply and limited to the case where the domestic corporation has stated, in books and documents, to the effect that the derivative transactions, etc. aimed to decrease the net operating loss on hedged assets, etc. and has entered other matters specified by an Ordinance of the Ministry of Finance, as specified by an Ordinance of the Ministry of Finance), when any of the assets or liabilities prescribed in item (i), or monies prescribed in item (ii), with which the net operating loss on hedged assets, etc. is to be decreased, have neither been transferred, extinguished, received, nor paid during the period from the time of the derivative transactions, etc. to the end of a business year, and when it falls under the case specified by a Cabinet Order as the case where the derivative transactions, etc. are deemed to be effective to decrease the net operating loss on hedged assets, etc., the portion of the amount of profit or loss from the derivative transactions, etc. (meaning the amount of profit or loss on the settlement of the derivative transactions, etc. (referred to as the "profit or loss on settlement" in paragraph (4)), the amount equivalent to the profit or loss prescribed in Article 61-4, paragraph (1) (Inclusion of the Amount Equivalent to Profits or Losses on the Short Selling, etc. of Securities in Gross Profits or Deductible Expenses), the amount equivalent to the profit or loss prescribed in paragraph (1) of the preceding Article, and the amount equivalent to the difference prescribed in Article 61-9, paragraph (2) (Inclusion in Gross Profits or Deductible Expenses of the Difference from the Conversion of Assets, etc. in a Foreign Currency at the End of the Period)), which has been calculated, as specified by Cabinet Order, as the effective portion in order to decrease the net operating loss on hedged assets, etc., is excluded from gross profits or deductible expenses, when calculating the amount of income for the business year, notwithstanding the provisions of Article 61-4, paragraph (1), paragraph (1) of the preceding Article, and Article 61-9, paragraph (2):

(2)The derivative transactions, etc. prescribed in the preceding paragraph mean the following transactions (excluding transactions based on a foreign exchange futures contract, etc. as prescribed in Article 61-8, paragraph (2) in the case of being subject to the provisions of the paragraph and transactions as specified by Ordinance of the Ministry of Finance as prescribed in paragraph (1) of the preceding Article):

(3)In the case where a domestic corporation has received, as a result of a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution (referred to as a "qualified organizational restructuring" through to Article 61-8), the transfer of a contract for derivative transactions, etc. as prescribed in paragraph (1) (hereinafter referred to as "derivative transactions, etc." in this paragraph) that has been conducted so as to decrease the net operating loss on hedged assets, etc. from an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or transferring corporation (referred to as a "acquired corporation, etc." through to Article 61-8), and has received, as a result of the qualified organizational restructuring, the transfer of assets or liabilities prescribed in paragraph (1), item (i) (limited to assets or liabilities with which the net operating loss on hedged assets, etc. is to be decreased through the derivative transactions, etc.) or has come to receive or pay the monies prescribed in item (ii) of the paragraph (limited to monies with which the net operating loss on hedged assets, etc. is to be decreased through the derivative transactions, etc.) (where an acquired corporation, etc. involved in the qualified organizational restructuring subject to the provisions of paragraph (1) had already settled the derivative transactions, etc. that it had conducted so as to decrease the net operating loss on hedged assets, etc. prior to the qualified organizational restructuring, in the case where the domestic corporation has received, as a result of the qualified organizational restructuring, the transfer of assets or liabilities prescribed in item (i) of the paragraph (limited to assets or liabilities with which the net operating loss on hedged assets, etc. is to be decreased through the derivative transactions, etc.) from the acquired corporation, etc., or has come to receive or pay the monies prescribed in item (ii) of the paragraph (limited to monies with which the net operating loss on hedged assets, etc. is to be decreased through the derivative transactions, etc.)), when the acquired corporation, etc. has stated, in books and documents, to the effect prescribed in paragraph (1) and has entered other matters as prescribed in the paragraph, regarding the derivative transactions, etc. wherein the contract has been transferred (where the settlement had been made, the derivative transactions, etc. wherein the settlement had been made; hereinafter the same applies in this paragraph), as specified by Ordinance of the Ministry of Finance as prescribed in the paragraph, with regard to the application of the provisions of this Article in each business year after the business year containing the date of the qualified organizational restructuring, it is deemed that the domestic corporation has conducted the derivative transactions and has made the entry so as to decrease the net operating loss on hedged assets, etc. pertaining to the assets or liabilities prescribed in paragraph (1), item (i) that it has received as a result of the qualified organizational restructuring or the monies prescribed in item (ii) of the paragraph that it has come to receive or pay as a result of the qualified organizational restructuring.

(4)The disposition of the portion of the profit or loss on settlement calculated as specified by Cabinet Order as prescribed in paragraph (1) in each business year after the next business year, and other necessary matters concerning the application of the provisions of the preceding three paragraphs are specified by Cabinet Order.

Article 61-7(1)In the case where a domestic corporation has conducted derivative transactions, etc. (meaning derivative transactions, etc. as prescribed in paragraph (2) of the preceding Article; hereinafter the same applies in this Article) so as to decrease the net operating loss that is likely to arise due to fluctuations in the value of its securities not for buying and selling (meaning securities not for buying and selling as prescribed in Article 61-3, paragraph (1), item (ii) (Inclusion of Valuation Gains or Losses on Securities for Buying and Selling in Gross Profits or Deductible Expenses); hereinafter the same applies in this Article) (such fluctuations exclude those arising due to fluctuations in foreign exchange rates in the value of the securities listed in Article 61-9, paragraph (1), item (ii), (b), which is to be converted into Japanese yen as prescribed in paragraph (1) of the following Article (hereinafter the amount converted into Japanese yen is referred to as the "amount in Japanese yen" in this paragraph) by the conversion method at the current exchange rate prescribed in Article 61-9, paragraph (1), item (i), (b) (Inclusion in Gross Profits or Deductible Expenses of Profits or Losses on the Difference from the Conversion of Assets in a Foreign Currency at the End of the Period)) (hereinafter such net operating loss is referred to as the " net operating loss on hedged securities" in this Article), (limited to the case where the domestic corporation has stated, in books and documents, to the effect that the securities not for buying and selling are to be evaluated or converted into the amount in Japanese yen as specified by Cabinet Order, and has entered other matters as specified by Ordinance of the Ministry of Finance as specified by Ordinance of the Ministry of Finance), when the securities not for buying and selling have not been transferred during the period from the time of the derivative transactions, etc. to the end of a business year, and when it falls under the case specified by Cabinet Order as a case where the derivative transactions, etc. are deemed to be effective to decrease the net operating loss on hedged securities, the portion of the difference between the value and the book value of the securities not for buying and selling, which has been calculated, as specified by Cabinet Order, as the portion corresponding to the amount of profit or loss prescribed in paragraph (1) of the preceding Article that arises from the derivative transactions, etc., is included in gross profits or deductible expenses, when calculating the amount of income for the business year

(2)In the case where a domestic corporation has received, as a result of a qualified organizational restructuring, the transfer of a contract for derivative transactions, etc. that has been conducted so as to decrease the net operating loss on hedged securities from an acquired corporation, etc., and has received, as a result of the qualified organizational restructuring, the transfer of securities not for buying and selling (limited to those with which the net operating loss on hedged securities is to be decreased through the derivative transactions, etc.) (where an acquired corporation, etc. involved in the qualified organizational restructuring subject to the provisions of the preceding paragraph had already settled derivative transactions, etc. that it had conducted so as to decrease the net operating loss on hedged securities prior to the qualified organizational restructuring, in the case where the domestic corporation has received, as a result of the qualified organizational restructuring, the transfer of securities not for buying and selling (limited to those with which the net operating loss on hedged securities is to be decreased through the derivative transactions, etc.) from the acquired corporation, etc.), when the acquired corporation, etc. has stated, in books and documents, to the effect prescribed in the preceding paragraph and has entered other matters as prescribed in the paragraph, regarding the derivative transactions, etc. wherein the contract has been transferred (where the settlement had been made, the derivative transactions, etc. wherein the settlement had been made; hereinafter the same applies in this paragraph), as specified by Ordinance of the Ministry of Finance as prescribed in the paragraph, with regard to the application of the provisions of this Article in each business year after the business year containing the date of the qualified organizational restructuring, it is deemed that the domestic corporation has conducted the derivative transactions and has made the entry so as to decrease the net operating loss on hedged securities pertaining to the securities not for buying and selling that it has received as a result of the qualified organizational restructuring.

(3)The disposition of the amount calculated as specified by Cabinet Order as prescribed in paragraph (1) in the next business year, and other necessary matters concerning the application of the provisions of the preceding two paragraphs are specified by Cabinet Order.

Article 61-8(1)In the case where a domestic corporation has conducted transactions in a foreign currency (meaning the buying and selling of assets, provision of services, lending and borrowing of monies, payments of dividend of surplus or other transactions whose payment is made in a foreign currency; hereinafter the same applies in this Division), the amount in Japanese yen (meaning the amount of that foreign currency converted into Japanese yen; hereinafter the same applies in this Division) of the transactions in a foreign currency is to be the amount converted at the foreign exchange rate as of the time when the transactions in a foreign currency were conducted.

(2)In the case where a domestic corporation has determined the amount in Japanese yen of the assets or liabilities that have been acquired or have arisen from transactions in a foreign currency (excluding the acquisition and transfer of commodities for short-term trading as prescribed in Article 61, paragraph (1) (Inclusion in Gross Profits or Deductible Expenses of Capital Gains or Losses and Gains or Losses on the Fair Valuation of Commodities for Short-Term Trading) or securities for buying and selling as prescribed in Article 61-3, paragraph (1), item (i) (Inclusion of Valuation Gains or Losses on Securities for Buying and Selling in Gross Profits or Deductible Expenses); the same applies in the following paragraph) under a foreign exchange futures contract, etc. (meaning a contract as specified by Ordinance of the Ministry of Finance to be a contract which determines the amount in Japanese yen of the assets or liabilities to be acquired or which will arise from transactions in a foreign currency; hereinafter the same applies in this Division), when the domestic corporation stated, in books and documents, to the effect, as specified by Ordinance of the Ministry of Finance, as of the day on which the foreign exchange futures contract, etc. was concluded, the amount in Japanese yen of the assets or liabilities is to be the amount converted pursuant to the provisions of the preceding paragraph.

(3)In the case where a domestic corporation has received, as a result of a qualified organizational restructuring, the transfer of a foreign exchange futures contract, etc. from an acquired corporation, etc. so as to determine the amount in Japanese yen of the assets or liabilities to be acquired from the acquired corporation, etc. or which will arise from transactions in a foreign currency, and has come to conduct the transactions in a foreign currency (limited to transactions causing the acquisition or occurrence of the assets or liabilities whose amount in Japanese yen is to be determined under the foreign exchange futures contract) as a result of the qualified organizational restructuring, when the acquired corporation, etc. stated, in books and documents, to the effect prescribed in the preceding paragraph, regarding the foreign exchange futures contract, etc., as specified by Ordinance of the Ministry of Finance as prescribed in the paragraph, as of the day on which the contract, etc. was concluded, with regard to the application of the provisions of this Article in each business year after the business year containing the date of the qualified organizational restructuring, it is deemed that the domestic corporation has concluded the foreign exchange futures contract, etc. and has made the entry so as to determine the amount in Japanese yen of the assets or liabilities.

(4)Necessary matters concerning the application of the provisions of the preceding three paragraphs are specified by Cabinet Order.

Article 61-9(1)In the case where a domestic corporation holds the following assets and liabilities (hereinafter referred to as "assets, etc. in a foreign currency" in this Division) as of the end of a business year, the amount in Japanese yen of the assets, etc. in a foreign currency as of the time is to be the amount converted by the method specified in the following items in accordance with the category of the assets, etc. in a foreign currency (with regard to the assets, etc. in a foreign currency listed in item (i), item (ii)(b), and item (iii), by a method that the domestic corporation selected from those prescribed in these provisions, and when the domestic corporation had not selected any method, by a method from those prescribed in these provisions that is specified by Cabinet Order):

(2)In the case where a domestic corporation holds assets, etc. in a foreign currency (limited to those whose amount is converted into Japanese yen by the conversion method at the current exchange rate; hereinafter the same applies in this paragraph) as of the end of a business year, the amount equivalent to the difference between the amount of the assets, etc. in a foreign currency that is conversion into Japanese yen by the conversion method at the current exchange rate and their book value as of the time is included in gross profits or deductible expenses, when calculating the amount of income for the business year.

(3)The Conversion of the amount of assets, etc. in a foreign currency into Japanese yen in the case where the foreign exchange rates fluctuate significantly, procedures for selecting a method to be used to convert the amount of assets, etc. in a foreign currency into Japanese yen, disposition of the amount equivalent to the difference set forth in the preceding paragraph in the next business year, and other necessary matters concerning the application of the provisions of the preceding two paragraphs are specified by Cabinet Order.

Article 61-10(1)When the provisions of Article 61-8, paragraph (2) (Conversion of Transactions in a Foreign Currency with the Amount in Japanese Yen Determined under a Foreign Exchange Futures Contract) have been applied to assets, etc. in a foreign currency (excluding securities not for buying and selling as prescribed in Article 61-3, paragraph (1), item (i) (Inclusion of Valuation Gains or Losses on Securities for Buying and Selling in Gross Profits or Deductible Expenses); the same applies through to paragraph (4)) that a domestic corporation holds as of the end of a business year, upon converting the amount of transactions in a foreign currency that caused the acquisition or occurrence thereof into Japanese yen, in the calculation of the amount of income for each business year between the business year containing the day on which the foreign exchange futures contract, etc. for the assets, etc. in a foreign currency was concluded (in the case where the day is prior to the date of the transactions in a foreign currency that caused the acquisition or occurrence of the assets, etc. in a foreign currency, containing the day on which the transactions in a foreign currency were conducted) and the business year containing the day on which the Japanese currency is to be received or paid due to the settlement of the assets, etc. in a foreign currency, the portion of the premium or discount on forward exchange contracts (meaning the difference between the amount of the assets, etc. in a foreign currency that is converted into Japanese yen as determined under a foreign exchange futures contract, etc. and their amount converted at the foreign exchange rate as of the time of the transactions in a foreign currency that caused the acquisition or occurrence thereof) that has been calculated, as specified by Cabinet Order, as the amount to be allocated to each of the business years (referred to as the "allocated premium or discount on forward exchange contracts" in the following paragraph) is included in gross profits or deductible expenses.

(2)In the case where a domestic corporation has transferred, as a result of a qualified company split by spin-off, a qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified company split by spin-off, etc." in this paragraph and the following paragraph), assets, etc. in a foreign currency (limited to those to which the provisions of Article 61-8, paragraph (2) applied upon converting the amount of transactions in a foreign currency that caused the acquisition or occurrence thereof into Japanese yen; hereinafter the same applies in this paragraph) and the foreign exchange futures contract, etc. that determined the amount in Japanese yen of the assets, etc. in a foreign currency to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or transferee corporation (referred to as a "succeeding corporation in a company split, etc." in the following paragraph), the amount equivalent to the allocated premium or discount on forward exchange contracts calculated pursuant to the provisions of the preceding paragraph, when deeming the day preceding the date of the qualified company split by spin-off, etc. to be the last day of a business year, is included in gross profits or deductible expenses, when calculating the amount of income for the business year containing the date of the qualified company split by spin-off, etc.

(3)In the case where assets, etc. in a foreign currency are short-term assets, etc. in a foreign currency (meaning the portion of the assets, etc. in a foreign currency for which the due date for the receipt or payment of the Japanese currency due to the settlement thereof falls on a day up to the day preceding the day on which one year has elapsed from the day following the last day of the business year (in the case where the assets, etc. in a foreign currency are to be transferred to a succeeding corporation in a company split, etc. as a result of a qualified company split by spin-off, etc., from the day following the day preceding the qualified company split by spin-off, etc.)), the premium or discount on the forward exchange contracts prescribed in paragraph (1) may be included in gross profits or deductible expenses, when calculating the amount of income for the business year, notwithstanding the provisions of the paragraph.

(4)In the case where a domestic corporation has received, as a result of a qualified merger, qualified company split, qualified contribution in kind, or qualified post-formation contribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph), the transfer of assets, etc. in a foreign currency (limited to those for which an acquired corporation, splitting corporation, corporation making a capital contribution in kind, or transferring corporation (hereinafter referred to as a "acquired corporation, etc." in this paragraph) was subject to the provisions of Article 61-8, paragraph (2) upon converting the amount of transactions in a foreign currency that caused the acquisition or occurrence thereof into Japanese yen) and the foreign exchange futures contract, etc. that determined the amount in Japanese yen of the assets, etc. in a foreign currency from an acquired corporation, etc., with regard to the application of the provisions of this Article in each business year after the business year containing the date of the qualified organizational restructuring, it is deemed that the domestic corporation has been subject to the provisions of the paragraph upon converting the amount of transactions in a foreign currency that caused the acquisition or occurrence of the assets, etc. in a foreign currency into Japanese yen.

(5)The procedures when intending to seek the application of the provisions of paragraph (3) and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.

Article 81-6(1)The portion of the sum of the donations made by a consolidated corporation in each consolidated business year (excluding the amount of donations subject to the provisions of the following paragraph) that exceeds the amount of the consolidated individual stated capital of the consolidated parent corporation related to the consolidated corporation as of the end of the consolidated business year or the amount calculated as specified by Cabinet Order based on the consolidated income for the consolidated business year is excluded from deductible expenses, when calculating the amount of consolidated income of the consolidated corporation for each consolidated business year.

(2)When the amount of a donation made by a consolidated corporation in each consolidated business year contains any donation to another consolidated corporation that has a consolidated full controlling interest in the consolidated corporation, the amount of the donation is excluded from deductible expenses, when calculating the amount of income of the consolidated corporation for each consolidated business year.

(3)In the case referred to in paragraph (1), when the amount of a donation as prescribed in the paragraph contains any donation listed in the items of Article 37, paragraph (3) (Exclusion of Contributions and Donations from Deductible Expenses), the sum of the donations is excluded from the sum of the donations prescribed in paragraph (1).

(4)In the case referred to in paragraph (1), when the amount of a donation as prescribed in the paragraph contains any donation as prescribed in Article 37, paragraph (4), the sum of the donations (in the case where the sum exceeds the amount of the consolidated individual stated capital, etc. of the consolidated parent corporation related to the consolidated corporation set forth in paragraph (1) as of the end of the consolidated business year or the amount calculated as specified by Cabinet Order based on the consolidated income for the consolidated business year, the amount equivalent to the calculated amount) is excluded from the sum of the donations prescribed in paragraph (1).

(5)The amount that a consolidated corporation has spent for the purpose of entrusting as trust property under a specified charitable trust as prescribed in Article 37 is deemed to be the amount of a donation, and the provisions of paragraph (1), the preceding paragraph, and the following paragraph applies. In this case, the term "any donation as prescribed in Article 37, paragraph (4)" in the preceding paragraph is deemed to be replaced with "any donation as prescribed in Article 37, paragraph (4) that is applied by replacing the terms pursuant to the provisions of paragraph (6) of the Article," and other necessary matters concerning procedures for seeking the application of the provisions of this paragraph are specified by Cabinet Order.

(6)The provisions of Article 37, paragraphs (7) through (10) apply mutatis mutandis to the case where the provisions of the preceding paragraphs apply. In this case, the term "are retained" in paragraph (9) of the Article is deemed to be replaced with "are retained by the respective consolidated corporations that have made a donation as prescribed in the items of paragraph (3) or a donation as prescribed in paragraph (4)."

(7)The calculation of the portion of the amount excluded from deductible expenses under paragraph (1) or paragraph (2) that is to be attributed to each consolidated corporation and other necessary matters concerning the application of the provisions of these paragraphs are specified by Cabinet Order.