The tax base of corporation tax on income for each business year imposed on a domestic corporation is the amount of income for each business year.

①The amount of income of a domestic corporation for each business year is the amount that remains after deducting the amount of deductible expenses for the business year from the amount of gross profits for the business year.

②When calculating the amount of income of a domestic corporation for each business year, the amount to be included in gross profits for the business year is to be the amount of proceeds for the business year arising from the sales of assets, transfer of assets or provision of services for value or without compensation, acceptance of assets without compensation, or other transactions other than capital, etc. transactions, except as otherwise provided.

③When calculating the amount of income of a domestic corporation for each business year, the amount to be included in deductible expenses in the business year is to be the amounts listed as follows, except as otherwise provided:

④The amount of proceeds for the business year prescribed in paragraph (2) and the amounts listed in the items of the preceding paragraph are to be calculated in accordance with an accounting standard that is generally accepted as fair and appropriate, except as otherwise provided.

⑤The capital, etc. transactions prescribed in paragraph (2) or paragraph (3) means transactions causing an increase or decrease to the amount of stated capital, etc. of a corporation, and the distribution of profits or distribution of surplus conducted by a corporation (including the distribution of monies prescribed in Article 115, paragraph (1) (Interim Dividend) of the Act on the Securitization of Assets) and the distribution of residual assets or delivery thereof.

①The amount of proceeds pertaining to the sale or transfer of assets or the provision of services by a domestic corporation (hereinafter referred to as the "sale, etc. of assets" in this Article) is, except as otherwise provided (excluding paragraph (4) of the preceding Article), included in the amount of gross profit, when calculating the amount of income for the business year that includes the day of the delivery of the subject matter or the provision of the services pertaining to the sale, etc. of assets.

②In the case where a domestic corporation, in accordance with an accounting standard that is generally accepted as fair and appropriate, has booked the amount of proceeds pertaining to the sale, etc. of assets as proceeds in the final settlement of the accounts for the business year that includes the day on which the contract pertaining to the sale, etc. of assets becomes effective or any other day close to the day prescribed in the preceding paragraph, notwithstanding the provisions of that paragraph, the amount of proceeds pertaining to the sale, etc. of assets is, except as otherwise provided (excluding paragraph (4) of the preceding Article), included in the amount of gross profit, when calculating the amount of income for that business year.

③In the case where a domestic corporation has made a sale, etc. of assets (excluding the case where it has booked the amount of proceeds pertaining to the sale, etc. of assets as proceeds, in accordance with an accounting standard that is generally accepted as fair and appropriate, in the final settlement of the accounts for the business year that includes the day prescribed in paragraph (1) or the close day prescribed in the preceding paragraph), when the Final Return for the business year that includes the close day prescribed in that paragraph pertaining to the sale, etc. of assets contains a statement concerning the inclusion in gross profit of the amount of proceeds pertaining to the sale, etc. of assets, the provisions of that paragraph apply by deeming that the amount has been booked as proceeds in the final settlement of the accounts for that business year.

④The amount to be included in the amount of gross profit, when calculating the amount of income for that business year pursuant to the provisions of paragraph (1) or (2), as the amount of proceeds pertaining to the sale, etc. of assets of a domestic corporation for each business year is, except as otherwise provided (excluding paragraph (4) of the preceding Article), the value at the time of delivery of the assets sold or transferred, or the amount equivalent to the amount of consideration normally receivable for the services provided.

⑤The value at the time of delivery or the amount of consideration normally receivable referred to in the preceding paragraph is to be the value as it would be if there were no possibility of the occurrence of the facts listed below, even in the case where such facts may occur with regard to the sale, etc. of assets referred to in that paragraph:

⑥In the cases of the preceding paragraphs and paragraph (2) of the preceding Article, the amount of proceeds pertaining to the transfer of assets without compensation is to include the amount of proceeds pertaining to the transfer of assets as a distribution of profits or distribution of surplus by means of assets other than monies and a distribution of residual assets or delivery thereof, or any other act similar thereto.

⑦Beyond what is provided for in the preceding two paragraphs, the treatment in the case where corrective accounting has been made for the amount of proceeds pertaining to the sale, etc. of assets and other necessary matters concerning the application of the provisions of paragraphs (1) through (4) are specified by Cabinet Order.

①In the case where a domestic corporation receives any of the following amounts (for the amount listed in item (i), excluding those received from a foreign corporation, a public interest corporation, etc. or an association or foundation without juridical personality and those pertaining to a qualified in-kind distribution; hereinafter referred to as the "amount of dividends, etc." in this Article), the amount of dividends, etc. (for the amount of dividends, etc. pertaining to shares, etc. of a related corporation, the amount that remains after deducting from the amount of dividends, etc. the amount calculated as specified by Cabinet Order as the amount equivalent to the amount of interest pertaining to the amount of dividends, etc.; for the amount of dividends, etc. pertaining to shares, etc. (meaning shares or capital contributions; hereinafter the same applies in this Article) that fall under none of wholly owned subsidiary shares, etc., shares, etc. of a related corporation and shares, etc. held for non-controlling purposes, the amount equivalent to 50 percent of the amount of dividends, etc.; and for the amount of dividends, etc. pertaining to shares, etc. held for non-controlling purposes, the amount equivalent to 20 percent of the amount of dividends, etc.) is excluded from the amount of gross profit, when calculating the amount of income of the domestic corporation for each business year:

②In 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 Article 24, paragraph (1); hereinafter the same applies in this paragraph), within one month on or before the base date, etc. pertaining to the amount of dividends, etc. (meaning the day specified in each of the following items for the category of the amount of dividends, etc. listed in the relevant item; hereinafter the same applies in this paragraph) and then transferred the shares, etc. or other shares, etc. of the same issue within two months after the base date, etc., the provisions of the preceding paragraph do not apply to the amount of dividends, etc. of the portion of the transferred shares, etc. that is specified by Cabinet Order.

③The provisions of paragraph (1) do not apply, in the case where a domestic corporation has acquired (including succession through a qualified merger or Qualified Company Split by Split-Off) shares, etc. which are the principal for the amount of dividends, etc. it receives (limited to the amount deemed to be the amount of dividends, etc. that the domestic corporation receives pursuant to the provisions of Article 24, paragraph (1) (limited to the part pertaining to item (v)); hereinafter the same applies in this paragraph) and for which the occurrence of the event listed in that item that gives rise to the amount of dividends, etc. is scheduled, to the amount of dividends, etc. pertaining to the shares, etc. so acquired (limited to the amount specified by Cabinet Order as arising from the scheduled event (excluding an event to which the provisions of Article 61-2, paragraph (17) (Inclusion of Capital Gains or Losses on Securities in Gross Profits or Deductible Expenses) apply)).

④The shares, etc. of a related corporation prescribed in paragraph (1) means the shares, etc. of another domestic corporation (excluding the wholly owned subsidiary shares, etc. prescribed in the following paragraph) in the case specified by Cabinet Order as the case where a domestic corporation (including another corporation that has a full controlling interest with the domestic corporation) holds shares, etc. whose number or amount exceeds one-third of the total number or total amount of the issued shares of or capital contributions to the other domestic corporation (excluding a public interest corporation, etc. and an association or foundation without juridical personality) (excluding the shares, etc. that the other domestic corporation holds in itself).

⑤The wholly owned subsidiary shares, etc. prescribed in paragraph (1) means the shares, etc. of another domestic corporation (excluding a public interest corporation, etc. and an association or foundation without juridical personality) that has a full controlling interest with a domestic corporation throughout the calculation period of the amount of dividends, etc., which are specified by Cabinet Order.

⑥The non-controlling-purpose shares, etc. prescribed in paragraph (1) mean the shares, etc. of another domestic corporation (excluding the wholly owned subsidiary shares, etc. prescribed in the preceding paragraph) in the case specified by Cabinet Order as a case where a domestic corporation (including another corporation with which the domestic corporation has a full controlling interest) holds shares, etc. equivalent to 5 percent or less of the total number or total amount of issued shares or capital contributions of another domestic corporation (excluding a public interest corporation, etc. and an association or foundation without juridical personality) (such issued shares or capital contributions exclude shares, etc. that the second domestic corporation holds in itself).

⑦The provisions of paragraph (1) apply only in the case where a Final Return, amended return, or written request for Reassessment comes with the attachment of documents stating 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 the provisions of that paragraph does not exceed such recorded amount.

⑧Necessary matters concerning the application of the provisions of paragraphs (1) and (2) and the provisions of paragraphs (1) through (6) in the case where the shares, etc. have been transferred as a result of a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution are specified by Cabinet Order.

①In the case where there is the amount listed in paragraph (1), item (i) of the preceding Article that a domestic corporation receives from a foreign subsidiary (meaning a foreign corporation that satisfies the requirements specified by Cabinet Order, such as the requirement that the number or amount of its shares or capital contributions held by the domestic corporation is equivalent to 25 percent or more of the total number or total amount of its issued shares or capital contributions (excluding the shares that it holds in itself and the capital contributions made thereby); the same applies hereinafter in this Article) (hereinafter referred to as the "amount of dividend of surplus, etc." in this Article), the amount obtained by deducting from the amount of dividend of surplus, etc. the amount calculated as specified by Cabinet Order as the amount equivalent to the amount of expenses pertaining to the amount of dividend of surplus, etc. is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

②The provisions of the preceding paragraph do not apply to the following amounts of dividend of surplus, etc.:

③In the case where the amount of dividend of surplus, etc. that a domestic corporation receives from a foreign subsidiary is an amount part of which has been included in deductible expenses, when calculating the amount of income of the foreign subsidiary, notwithstanding the provisions of the preceding paragraph (limited to the part pertaining to item (i)), the amount specified by Cabinet Order as the amount of the portion of the amount of dividend of surplus, etc. received that has been included in deductible expenses (referred to as the "amount of dividends received corresponding to deductible expenses" in the following paragraph and paragraph (7)) may be treated as the amount of dividend of surplus, etc. listed in that item.

④In the case where the provisions of the preceding paragraph have been applied to the amount of dividend of surplus, etc. that a domestic corporation received from a foreign subsidiary, if the amount of dividends received corresponding to deductible expenses is increased in each business year after the business year containing the date on which the corporation received the amount of dividend of surplus, etc., the amount of dividend of surplus, etc. listed in paragraph (2), item (i) is, notwithstanding the provisions of that paragraph (limited to the part pertaining to that item) and the preceding paragraph, to be the amount specified by Cabinet Order as the amount of dividends received corresponding to deductible expenses after the increase.

⑤The provisions of paragraph (1) apply only in the case where a Final Return, amended return, or written request for Reassessment comes with the attachment of documents stating the amount of dividend of surplus, etc. that is to be excluded from gross profits and a detailed statement concerning the calculation thereof, and the documents specified by Ministry of Finance Order are retained. In this case, the amount to be excluded from gross profits pursuant to the provisions of that paragraph does not exceed such recorded amount.

⑥Even in the case where the documents specified by Ministry of Finance Order prescribed in the preceding paragraph have not been retained for all or part of the amount to be excluded from gross profits pursuant to the provisions of paragraph (1), the district director may apply the provisions of paragraph (1) to the amount for which the documents were not retained, when they find any unavoidable circumstances for the failure to retain the documents.

⑦The provisions of paragraph (3) apply only in the case where the Final Return, amended return, or written request for Reassessment for the business year containing the date on which the amount of dividend of surplus, etc. referred to in that paragraph is received comes with the attachment of documents stating that the application of the provisions of that paragraph is sought, and stating the amount of dividends received corresponding to deductible expenses and a detailed statement concerning the calculation thereof, and the documents specified by Ministry of Finance Order, such as documents that clarify the amount of dividend of surplus, etc. included in deductible expenses when calculating the amount of income of the foreign subsidiary, are retained.

⑧Necessary matters concerning the application of the provisions of paragraph (1) and the provisions of paragraphs (1) through (4) in the case where shares of or capital contributions to a foreign corporation have been transferred as a result of a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution are specified by Cabinet Order.

①In the case where a domestic corporation that is a shareholder, etc. of a corporation (excluding public interest corporations, etc. and associations or foundations 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 (for assets pertaining to a qualified in-kind distribution, the amount equivalent to the book value of the assets of the corporation as of immediately prior to the delivery) exceeds the portion of the corporation's amount of 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) or item (ii) (Exclusion of Dividends Received from Gross Profits):

②Even in the case where an acquiring corporation had not delivered shares or other assets 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 and the following paragraph) that the acquiring corporation held as of immediately prior to the merger, or 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 delivery of the shares or other assets, as specified by Cabinet Order.

③Even in the case where an acquiring corporation or a splitting corporation has not delivered shares or other assets to the shareholders, etc. of the acquired corporation or the splitting corporation's shareholders, etc. as a result of a merger or company split by split-off, if the merger or company split by split-off falls under a merger or company split by split-off specified by Cabinet Order as one in which the delivery of shares of the acquiring corporation or succeeding corporation in a company split is found to have been omitted, the provisions of paragraph (1) apply by deeming that these shareholders, etc. have received the delivery of shares of the acquiring corporation or succeeding corporation in a company split, as specified by Cabinet Order.

④Necessary 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 three paragraphs are specified by Cabinet Order.

①In 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.

②In the case where, as an order on the confirmation of a reorganization plan has been rendered with regard to its assets, a domestic corporation has revaluated its assets in accordance with the provisions of the Corporate Reorganization Act (Act No. 154 of 2002) or the Act on Special Measures for the Reorganization Proceedings of Financial Institutions (Act No. 95 of 1996) or has revaluated its assets otherwise as specified by 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.

③In the case where an order on the confirmation of a rehabilitation plan has been rendered for a domestic corporation 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 as unsuitable for recording a valuation gain) 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).

④In the case where the domestic corporations referred to in the preceding two paragraphs are group tax sharing corporations, the provisions of the preceding two paragraphs do not apply to shares of or capital contributions to another group tax sharing corporation (excluding a corporation specified by Cabinet Order as a corporation not subject to the provisions of Article 64-5 (Aggregation of Profits and Losses) and the group tax sharing parent corporation) held by those domestic corporations.

⑤In 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.

⑥The provisions of paragraph (3) apply only in the case where a Final 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 "statement of valuation gain" in the following paragraph) and is attached with documents specified by Ministry of Finance Order (referred to as "documents related to valuation gain" in the following paragraph) (when, with regard to the assets prescribed in Article 33, paragraph (4) (Valuation Loss on Assets), 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 a valuation loss" in the following paragraph), only in the case where a Final Return contains the statement of valuation loss prescribed in paragraph (7) of the Article (referred to as a "statement of valuation loss" in the following paragraph) and the documents related to valuation loss prescribed in paragraph (7) of the Article (referred to as "documents related to valuation loss" in the following paragraph)).

⑦Even 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.

⑧Beyond what is provided for in the preceding three paragraphs, necessary matters concerning the application of the provisions of paragraphs (1) through (4) are specified by Cabinet Order.

①The amount of gain on gifts received that a domestic corporation has received in each business year from another domestic corporation with which the domestic corporation has a full controlling interest (limited to a full controlling interest held by a corporation) (limited to an amount corresponding to the amount of a donation prescribed in Article 37, paragraph (7) that would be included in deductible expenses, when calculating the amount of income of the other domestic corporation for each business year, if the provisions of Article 37 (Exclusion of Contributions or Donations from Deductible Expenses) were not applied) is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

②The amount of gain on gifts received prescribed in the preceding paragraph, irrespective of the gift having been made as a donation, contribution, gift, or under any other name, is to be the amount of monies, 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, in the case where a domestic corporation has received a gift or the gratuitous conveyance of monies or other assets or economic benefits (excluding those to be deemed expenses for advertising or providing samples or other equivalent expenses, and entertainment and social expenses, reception expenses, and welfare expenses; the same applies in the following paragraph).

③In the case where a domestic corporation has received a transfer of assets or a conveyance of 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 found to have been, in effect, received as a gift or gratuitous conveyance is to be included in the amount of gain on gifts received set forth in the preceding paragraph.

①In 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:

②In the case where the amount of foreign withholding tax, etc. prescribed in Article 39-2 (Exclusion of Foreign Withholding Tax, etc. on Dividends Received from Foreign Subsidiaries from Deductible Expenses) that is excluded from deductible expenses of a domestic corporation, when calculating the amount of income for each business year pursuant to the provisions of that Article, has been reduced, the amount of the reduction is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

③In the case where the amount of a foreign country's corporate tax (meaning the foreign country's corporate tax prescribed in Article 69, paragraph (1) (Foreign Tax Credit); hereinafter the same applies in this paragraph) that a domestic corporation has come to pay, for which the domestic corporation was subject to the provisions of paragraphs (1) through (3) or paragraph (18) of that Article (including as applied mutatis mutandis pursuant to paragraph (24) of that Article), has been reduced in each business year of the domestic corporation beginning within seven years after the first day of the business year in which it was subject to those provisions (hereinafter referred to as the "applicable business year" in this paragraph) (when the domestic corporation has received the transfer of the whole or a part of the business from another domestic corporation that is an acquired corporation, etc. as prescribed in paragraph (9) of that Article as a result of a qualified merger, etc. as prescribed in that paragraph, including the case where, out of the amount of the foreign country's corporate tax that the acquired corporation, etc. has come to pay, the amount of the foreign country's corporate tax that it has come to pay on the basis of the income arising from the business transferred to the domestic corporation has been reduced in each business year of the domestic corporation beginning within seven years after the first day of the applicable business year of the acquired corporation, etc. pertaining to that amount), the amount specified by Cabinet Order as the reduced portion of the creditable amount of the foreign country's corporate tax prescribed in paragraph (1) of that Article out of the amount of the reduction (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.

④In the case where a domestic corporation receives from another domestic corporation the group tax sharing tax effect amount of the other domestic corporation (meaning the amount exchanged between a group tax sharing corporation and another group tax sharing corporation as the amount equivalent to the amount of corporation tax and local corporation tax (excluding the amount of interest tax) that is reduced by applying the provisions of Article 64-5, paragraph (1) (Aggregation of Profits and Losses) or Article 64-7 (Aggregation of Losses) or any other provisions applicable only to group tax sharing corporations (including a domestic corporation that was a group tax sharing corporation; hereinafter the same applies in this paragraph)), the amount received is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

⑤In 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 (5), the amount to be refunded is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

In the case where, with regard to the net operating loss caused by a disaster prescribed in Article 80, paragraph (5) (Refund by Carryback of Loss) that has arisen in the interim period prescribed in that paragraph of a domestic corporation (hereinafter referred to as the "net operating loss caused by a disaster" in this Article), the domestic corporation (including another group tax sharing corporation, if the domestic corporation is a group tax sharing corporation) was subject to the provisions of Article 80, the amount equivalent to the net operating loss caused by a disaster that was used as the basis of the calculation of the amount to be refunded by filing the interim return based on provisional closing of accounts prescribed in that paragraph (if the domestic corporation is a group tax sharing corporation, the amount that was treated as the amount used as the basis of the calculation of the amount to be refunded pursuant to the provisions of paragraph (13) of that Article) is included in gross profits, when calculating the amount of income for the business year containing the interim period.

①When, with regard to a domestic corporation's inventory, 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 inventory held by the domestic corporation as of the end of the business year that is used as the basis of the calculation (hereinafter referred to as the "closing inventory" in this paragraph) is to be the amount evaluated based on the valuation method that the domestic corporation selected for the closing inventory from among the method of treating the average acquisition cost of inventory as the fair value of the inventory held as of the end of the business year and other valuation methods specified by Cabinet Order (in the case where the domestic corporation did not select any valuation method or did not evaluate the inventory based on the valuation method of their choice, the amount evaluated based on one of the valuation methods specified by Cabinet Order).

②Cabinet Order provides for special provisions on the selectable valuation methods referred to in the preceding paragraph, the way of selecting a valuation method, the acquisition cost of inventory to be used as the basis of the calculation of the fair value of inventory, and other necessary particulars concerning the valuation of inventory.

①With 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 of the amount of income for the business year, pursuant to the provisions of Article 22, paragraph (3) (General Rules for Calculation of the Amount of Income for 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 method under which the depreciation allowance is the same every year, the depreciation method under which the depreciation allowance decreases at a fixed rate every year, and other 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).

②In 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 corporation receiving a distribution in kind as a result of a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (for a qualified in-kind distribution, excluding a distribution of all residual assets; hereinafter referred to as a "qualified company split, 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, 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, etc. (referred to as the "business year of the company split, etc." in paragraph (4)).

③The 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 Ministry of Finance Order 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.

④Out 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 a depreciation allowance for the depreciable assets was accounted for as a loss by the domestic corporation set forth in the paragraph (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 corporation making a distribution in kind (hereinafter referred to as an "acquired corporation, etc." in this paragraph) as a result of a qualified merger or qualified in-kind distribution (limited to a distribution of all residual assets), the portion of the amount accounted for as a loss in each business year on or before the business year containing the day prior to the date of the qualified merger or the date of the determination of residual assets 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 corporation making a distribution in kind (hereinafter referred to as a "splitting corporation, etc." in this paragraph) as a result of a qualified company split, 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 on or before 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 forth in the paragraph that was excluded from deductible expenses in the calculation of the amount of income for the business year.

⑤In 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 62-9, paragraph (1) (Gains or Losses on the Fair Valuation of Assets Held by Wholly Owned Subsidiary Corporations in a share exchange Involved in Non-qualified Share Exchange) 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.

⑥Special 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, special provisions under which the amount corresponding to the portion that extends the usable period, etc., out of the amount expended on depreciable assets, is treated as the acquisition cost of depreciable assets, and other matters necessary for the depreciation of depreciable assets are specified by Cabinet Order.

①With 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 of the amount of income for the business year, pursuant to the provisions of Article 22, paragraph (3) (General Rules for Calculation of the Amount of Income for 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).

②In the case where, as a result of a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (for a qualified in-kind distribution, excluding a distribution of all residual assets; hereinafter referred to as a "qualified company split, etc." in this Article), a domestic corporation hands over its deferred assets to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind (hereinafter referred to as a "succeeding corporation in a company split, etc." in this Article) (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, 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, 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, etc. (referred to as the "business year of the company split, etc." in paragraph (6)).

③The 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 Ministry of Finance Order 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.

④In the case where a domestic corporation has effected a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (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 a distribution in kind involved in the qualified organizational restructuring:

⑤The 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 Ministry of Finance Order 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.

⑥Out 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 a depreciation allowance for the deferred assets was accounted for as a loss by the domestic corporation set forth in the paragraph (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 corporation making a distribution in kind (hereinafter referred to as an "acquired corporation, etc." in this paragraph) as a result of a qualified merger or qualified in-kind distribution (limited to a distribution of all residual assets), the portion of the amount accounted for as a loss in each business year on or before the business year containing the day prior to the date of the qualified merger or the date of the determination of residual assets 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 corporation making a distribution in kind (hereinafter referred to as a "splitting corporation, etc." in this paragraph) as a result of a qualified company split, 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 on or before 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.

⑦In 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 62-9, paragraph (1) (Gains or Losses on the Fair Valuation of Assets Held by Wholly Owned Subsidiary Corporations in a share exchange Involved in Non-qualified Share Exchange) 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.

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

①In 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.

②With regard to a domestic corporation's assets, when the value of the assets has fallen below their book value due to significant damages caused by a disaster or 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 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.

③In the case where a domestic corporation has revaluated its assets to reduce their book value pursuant to the provisions of the Corporate Reorganization Act or the Act on Special Measures for the Reorganization Proceedings of Financial Institutions as a result of an order of approval of a reorganization plan having been made, 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 paragraph (1).

④In the case where an order on the confirmation of a rehabilitation plan has been rendered for a domestic corporation 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 those specified by Cabinet Order as not being suitable for recording a valuation loss) 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).

⑤The provisions of the preceding three paragraphs do not apply to shares or capital contributions of another domestic corporation specified by Cabinet Order that has a full controlling interest with the domestic corporation referred to in the preceding three paragraphs, in the case where that domestic corporation holds them, or to shares or capital contributions of another group tax sharing corporation (excluding a corporation specified by Cabinet Order as a corporation not subject to the provisions of Article 64-5 (Aggregation of Profits and Losses), and the group tax sharing parent corporation) held by the domestic corporation referred to in those provisions in the case where it is a group tax sharing corporation.

⑥In 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.

⑦The provisions of paragraph (4) apply only in the case where a Final 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 "statement of valuation loss" in the following paragraph) and is attached with the documents specified by Ministry of Finance Order (referred to as "documents related to valuation loss" in the following paragraph) (when with regard to the assets prescribed in Article 25, paragraph (3) (Valuation Gains on Assets), 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 a valuation gain" in the following paragraph), only in the case where a Final Return contains a statement of valuation gain prescribed in paragraph (6) of the Article (referred to as a "statement of valuation gain" in the following paragraph) and is attached with the documents related to valuation gain prescribed in paragraph (6) of the Article (referred to as "documents related to valuation gain" in the following paragraph)).

⑧Even in the case where a Final Return has been filed without a statement of valuation loss (in the case where there is a valuation gain, without a statement of valuation loss or a statement of valuation gain) or without documents related to valuation loss (in the case where there is a valuation gain, without documents related to valuation loss or documents related to valuation gain), the district director may apply the provisions of paragraph (4), when they find any unavoidable grounds for the person's failure to make entries of such a statement or to attach such documents.

⑨Beyond what is provided for in the preceding three paragraphs, necessary matters concerning the application of the provisions of paragraphs (1) through (5) are specified by Cabinet Order.

①The amount of remuneration that a domestic corporation pays to its officers (such remuneration excludes a retirement allowance that does not fall under the category of performance-linked remuneration, any remuneration that is paid to officers who have duties as employees for carrying out such duties, and any remuneration 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:

②The 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.

③The 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

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

⑤The performance-linked remuneration prescribed in paragraph (1) means remuneration in monies, or in shares or share options, of an amount or number calculated on the basis of an indicator showing the state of profits, an indicator showing the state of the market price of shares or any other indicator showing the performance of the domestic corporation referred to in that paragraph or of a corporation that has a controlling interest with the domestic corporation, and remuneration in specified restricted shares or succeeding restricted shares as prescribed in Article 54, paragraph (1) or in specified share options or succeeding share options as prescribed in Article 54-2, paragraph (1) in which the number of shares or share options to be acquired without consideration or extinguished varies due to grounds other than the period of provision of services.

⑥Officers 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.

⑦The related corporation prescribed in paragraph (1), item (ii), (b) and (c) means a corporation specified by Cabinet Order as a corporation that has a controlling interest with the domestic corporation referred to in that paragraph.

⑧Beyond what is provided for in paragraph (4) through the preceding paragraph, necessary matters concerning the application of the provisions of paragraphs (1) through (3) are specified by Cabinet Order.

The 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.

①The 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 calculated, as specified by Cabinet Order, based on the sum of the amount of stated capital and the amount of capital reserve or the amount of capital contributions of the domestic corporation as of the end of the business year, or on the amount of income for the business year, is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

②The amount of a donation that a domestic corporation has made in each business year to another domestic corporation that has a full controlling interest (limited to a full controlling interest held by a corporation) with the domestic corporation (limited to the amount corresponding to the amount of gain on gifts received prescribed in Article 25-2, paragraph (2) that would be included in gross profits when calculating the amount of income of the other domestic corporation for each business year if the provisions of Article 25-2 (Gain on Gifts Received) did not apply) is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

③In 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:

④In 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, public interest corporation, etc. (excluding any of the general incorporated associations, general incorporated foundations and workers' cooperatives listed in Appended Table 2; hereinafter the same applies through paragraph (6)), 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 that are clearly to be appropriated to business relating to investment and 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 calculated, as specified by Cabinet Order, based on the sum of the amount of stated capital and the amount of capital reserve or the amount of capital contributions as of the end of the business year, or on the amount of 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 public interest corporation, etc.

⑤In the case referred to in paragraph (1), when the amount of a donation as prescribed in the paragraph contains any amount of a donation pertaining to the trust affairs of a public interest trust as prescribed in Article 2, paragraph (1), item (i) (Definitions) of the Act on Public Interest Trusts, made in order to make it the trust property of the public interest trust (excluding donations that are clearly to be appropriated to trust affairs relating to investment and donations falling under any of the categories prescribed in the items of paragraph (3) or in the preceding paragraph), the sum of such donations (in the case where the sum exceeds the amount obtained by deducting, from the amount calculated as specified by Cabinet Order as prescribed in the preceding paragraph, the amount excluded from the sum of the donations prescribed in paragraph (1) pursuant to the provisions of that paragraph, the amount equivalent to the amount after the deduction) 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 public interest corporation, etc.

⑥The amount that a public interest corporation, 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; provided, however, that this does not apply to the amount spent through accounting by concealing or falsifying facts.

⑦The 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.

⑧In 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.

⑨The provisions of paragraph (3) apply only in the case where a Final Return, amended return or written request for Reassessment is attached with a document stating the amount of donations listed in the items of paragraph (3) that is excluded from the sum of the donations prescribed in paragraph (1) and the details of the donations, and the provisions of paragraph (4) and paragraph (5) apply only in the case where a Final Return, amended return or written request for Reassessment is attached with a document stating the amount of donations prescribed in paragraph (4) or paragraph (5) that is excluded from the sum of the donations prescribed in paragraph (1) and the details of the donations, and where documents specified by Ministry of Finance Order as documents certifying that the donations stated in that document fall under the donations prescribed in those provisions 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 paragraphs (3) through (5) does not exceed the amount entered as the amount.

⑩Even in the case where the documents specified by Ministry of Finance Order prescribed in the preceding paragraph are not retained 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 (4) or paragraph (5), the district director may apply the provisions of paragraph (4) or paragraph (5) to the amount for which the documents were not retained, when they find any unavoidable grounds for the person's failure to retain the documents.

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

⑫Beyond what is provided for in paragraph (6) through the preceding paragraph, necessary matters concerning the application of the provisions of paragraphs (1) through (5) are specified by Cabinet Order.

①The 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) and the amount of local 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 are excluded from deductible expenses, except for the corporation taxes listed in items (i) through (iii) and the local corporation taxes listed in items (iv) through (vi), when calculating the amount of income of the domestic corporation for each business year:

②The 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:

③In the case where a domestic corporation pays to another domestic corporation the group tax sharing tax effect amount of the domestic corporation (meaning the group tax sharing tax effect amount prescribed in Article 26, paragraph (4) (Exclusion of Refunds from Gross Profits)), the amount paid is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

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

②The 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) or item (ii) (Exclusion of Dividends Received from Gross Profits) pursuant to the provisions of Article 24, paragraph (1), item (iv) (The Amount Deemed to Be Dividends) (limited to the part pertaining to the distribution of residual assets due to dissolution) that is excluded from gross profits in the calculation of the amount of income for each business year under the provisions of that paragraph or Article 23-2, paragraph (1) (Exclusion of Dividends Received from Foreign Subsidiaries from Gross Profits) or Article 62-5, paragraph (4) (Transfer of Assets through In-Kind Distribution), 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, 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:

In the case where a domestic corporation is subject to the provisions of Article 23-2, paragraph (1) (Exclusion of Dividends Received from Foreign Subsidiaries from Gross Profits) with regard to the amount of dividend of surplus, etc. prescribed in that paragraph that it receives from a foreign subsidiary prescribed in that paragraph (hereinafter referred to as the "amount of dividend of surplus, etc." in this Article) (including the case specified by Cabinet Order as a case where a foreign country's corporate tax (meaning the foreign country's corporate tax prescribed in Article 69, paragraph (1) (Foreign Tax Credit); hereinafter the same applies in this Article) is imposed on the amount used as the basis of the calculation of the amount of dividend of surplus, etc.), the amount of foreign withholding tax, etc. pertaining to the amount of dividend of surplus, etc. (excluding the amount of the portion to which the provisions of Article 23-2, paragraph (2) apply) (meaning the amount of a foreign country's corporate tax imposed, with the amount of dividend of surplus, etc. as the tax base, by a method similar to the method of withholding at source prescribed in Article 2, paragraph (1), item (xlv) (Definitions) of the Income Tax Act, and the amount of a foreign country's corporate tax specified by Cabinet Order as being imposed with the amount used as the basis of the calculation of the amount of dividend of surplus, etc. as the tax base) is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

In 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), or Article 133, paragraph (1) (Refund of Income Tax due to Reassessment, etc.) 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.

①In the case where a domestic corporation (excluding a group tax sharing corporation) seeks the application of the provisions of Article 69, Article 78, paragraph (1) (Refund of Income Tax), or Article 133, paragraph (1) (Refund of Income Tax due to Reassessment, etc.) with regard to the creditable amount of the foreign country's corporate tax (meaning the creditable amount of the foreign country's corporate tax prescribed in Article 69, paragraph (1) (Foreign Tax Credit); hereinafter the same applies in this Article), 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.

②In the case where a group tax sharing corporation, or another group tax sharing corporation that has a group tax sharing full controlling interest with the group tax sharing corporation as of the end of each business year of the group tax sharing corporation (limited to a business year ending on the last day of the business year of the group tax sharing parent corporation pertaining to the group tax sharing corporation), seeks the application of the provisions of Article 69, Article 78, paragraph (1), or Article 133, paragraph (1) with regard to the creditable amount of the foreign country's corporate tax, the creditable amount of the foreign country's corporate tax that the group tax sharing corporation is to pay is excluded from deductible expenses, when calculating the amount of income of the group tax sharing corporation for each business year.

In the case where a domestic corporation seeks the application of the provisions of Article 69-2, paragraph (1) (Credit for Amount Equivalent to the Foreign Tax Adjusted at Distribution) with regard to the amount equivalent to the foreign tax adjusted at distribution prescribed in that paragraph pertaining to the amount of income tax on the distribution of proceeds of a group investment trust of which it receives payment, the amount equivalent to the foreign tax adjusted at distribution pertaining to the amount of income tax on the distribution of proceeds of which it receives payment is excluded from deductible expenses, when calculating the amount of income of the domestic corporation for each business year.

①In 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 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) for the purpose of spending them to acquire or improve its Fixed Assets (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, with regard to Fixed Assets that it has acquired or improved by the end of the business year in line with the purpose of the delivery, their book value has been reduced, with the reduction accounted for as a loss, within the limit of the amount equivalent to the amount of the national subsidies, etc. received in the business year (if the Fixed Assets are depreciable assets acquired or improved in a business year prior to the business year, the amount calculated as specified by Cabinet Order on the basis of the amount of the national subsidies, etc.; hereinafter 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.

②In the case where a domestic corporation has acquired Fixed Assets which are delivered in lieu of national subsidies, etc. in each business year, when, in the business year, their book value has been reduced, with the reduction accounted for as a loss, 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.

③The 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.

④Even 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.

⑤In the case where a domestic corporation transfers, as a result of a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified company split, etc." in this Article), any of the Fixed Assets that it has acquired or improved by the time immediately prior to the qualified company split, etc. (limited to those in line with the purpose of the national subsidies, etc. received during the period from the beginning of the business year containing the date of the qualified company split, etc. to that time immediately prior) to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind (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, etc.), when, in the business year, the book value of the Fixed Assets has been reduced to within the limit of 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.

⑥In the case where a domestic corporation transfers, as a result of a qualified company split, 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, etc. to immediately prior to the qualified company split, etc.) to a succeeding corporation in a company split, etc., when, in the business year, 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.

⑦The 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 Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

⑧In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind 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 corporation making a distribution in kind, as a result of a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution, 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.

①In 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.

②A 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.

③The 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 corporation receiving a distribution in kind (referred to as an "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.

④The 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.

⑤Even 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.

⑥In the case where a domestic corporation has effected a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified company split, 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, 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, etc. to immediately prior to the qualified company split, 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:

⑦The 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 Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

⑧In the case where a domestic corporation has effected a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (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:

⑨With regard to a domestic corporation that has established a special account set forth in paragraph (1) and has effected a qualified company split, etc. (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, 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 the qualified company split, etc. and any other matters specified by Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

⑩The 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.

⑪Necessary 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 in-kind distribution (meaning the in-kind distribution prescribed in Article 2, item (xii)-5-2 (Definitions)) has been effected are specified by Cabinet Order.

①In 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 corporation making a distribution in kind (hereinafter referred to as an "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 the special account is taken over" 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 on or after the business year containing the date of the acquisition or improvement (in the case where the special account is taken over, in a business year on or 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, with the reduction accounted for as a loss, 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.

②The 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.

③Even 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.

④In 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, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified company split, 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, 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, etc. to immediately prior to the qualified company split, 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 corporation receiving a distribution in kind as a result of the qualified company split, 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.

⑤The 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 Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

⑥In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind 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.

①In 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 use railway or rail track services, or other persons who enjoy benefits from such facilities (hereinafter referred to as the "beneficiaries" in this Article), when, with regard to the Fixed Assets comprising such facilities that it has acquired by the end of the business year, the book value of the Fixed Assets has been reduced, with the reduction accounted for as a loss, within the limit of the amount up to the amount required for the acquisition of the Fixed Assets out of the amount of the monies or the value of the materials received in the business year (if the Fixed Assets are depreciable assets acquired in a business year prior to the business year, the amount calculated as specified by Cabinet Order on the basis of that amount; 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:

②In 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 beneficiaries of the business, when, in the business year, the book value of the Fixed Assets has been reduced, with the reduction accounted for as a loss, 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.

③The 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.

④Even 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.

⑤In the case where the domestic corporation set forth in paragraph (1) transfers, as a result of a qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified company split, etc." in this Article), Fixed Assets that it has acquired by the time immediately prior to the qualified company split, etc. (limited to those comprising the facilities in the case where the domestic corporation has received monies or materials, for the purpose of establishing the facilities necessary for conducting the business listed in the items of that paragraph, from the beneficiaries of the business during the period from the beginning of the business year containing the date of the qualified company split, etc. to that time immediately prior) to a succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind (referred to as a "succeeding corporation in a company split, etc." in the following paragraph), when, in the business year, 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.

⑥In the case where the domestic corporation set forth in paragraph (1) transfers, as a result of a qualified company split, 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 beneficiaries of the business during the period from the beginning of the business year containing the date of the qualified company split, etc. to immediately prior to the qualified company split, etc.) to a succeeding corporation in a company split, etc., when, in the business year, 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.

⑦The 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 Ministry of Finance Order to the competent district director with jurisdiction over the place for tax payment, within two months on or after the date of the qualified company split, etc.

⑧In the case where an acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind 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 corporation making a distribution in kind, as a result of a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution, 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.

①In the case where a cooperative, etc. that does not hold capital contributions has allotted the expenses for acquiring or improving its Fixed Assets to be used for its business to its partners or members in each business year, when, with regard to the Fixed Assets to be used for its business that it has acquired or improved by the end of the business year, the book value of the Fixed Assets has been reduced, with the reduction accounted for as a loss, within the limit of the amount up to the amount required for the acquisition or improvement of the Fixed Assets out of the amount paid based on such allotment in the business year (if the Fixed Assets are depreciable assets acquired or improved in a business year prior to the business year, the amount calculated as specified by Cabinet Order on the basis of that amount; 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.

②The 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.

③Even 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.

④The acquisition cost of the Fixed Assets to which the provisions of paragraph (1) have been applied and other necessary matters concerning the application of the provisions of the preceding three paragraphs are specified by Cabinet Order.

①In 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 (hereinafter referred to as "insurance monies, etc." through to Article 49) for any loss of or damage to its Fixed Assets (in the case where a qualified merger, qualified company split, qualified capital contribution in kind, or qualified in-kind distribution (hereinafter referred to as a "qualified organizational restructuring" in this paragraph and paragraph (8)) in which the domestic corporation is the acquiring corporation, succeeding corporation in a company split, corporation receiving a capital contribution in kind, or corporation receiving a distribution in kind (referred to as an "acquiring corporation, etc." in paragraph (8)) has been effected, such Fixed Assets include those owned by the acquired corporation, splitting corporation, corporation making a capital contribution in kind, or corporation making a distribution in kind (referred to as an "acquired corporation, etc." in paragraph (8)) involved in the qualified organizational restructuring; hereinafter referred to as "owned Fixed Assets" in this Article), when, with regard to substituted assets (meaning the same type of Fixed Assets substituting the owned Fixed Assets; the same applies hereinafter in this Article) that it has acquired by the end of the business year (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 Related to Lease Transactions); the same applies in paragraph (5)) or damaged assets, etc. (meaning the owned Fixed Assets that were damaged or assets to be substituted assets; the same applies in paragraph (5)) that it has improved by the end of the business year, the book value thereof has been reduced, with the reduction accounted for as a loss, within the limit of the amount calculated as specified by Cabinet Order as the amount of the gain pertaining to the insurance monies, etc. received in the business year (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.

②In 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, in the business year, the book value of the substituted assets has been reduced, with the reduction accounted for as a loss, 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.