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.