Order for Enforcement of the Income Tax Act

Except where otherwise provided, the acquisition price of Inventory that forms the basis for calculating the assessed value of Inventory pursuant to Article 99, paragraph (1) (Methods of Valuing Inventory) or Article 99-2, paragraph (1) (Special Methods of Valuing Inventory) is the amount specified in each of the following items for the category of assets listed in that item.

Inventory that was purchased: the sum of the following amounts:

the price paid for the purchase of that asset (where there are freight for taking delivery, cargo handling charges, transport insurance premiums, purchase commissions, customs duties (excluding the accessory tax prescribed in Article 2, paragraph (1), item (iv)-2 (Definitions) of the Customs Act), or other expenses required for the purchase of that asset, the amount obtained by adding the amount of those expenses);

the amount of expenses directly required to put that asset to consumption or make it available for sale;

Inventory pertaining to one's own manufacture, mining, extraction, cultivation, aquaculture, or other acts equivalent thereto (hereinafter in this item referred to as "manufacture, etc."): the sum of the following amounts:

the amount of raw material costs, labor costs, and expenses required for the manufacture, etc. of that asset;

the amount of expenses directly required to put that asset to consumption or make it available for sale;

Inventory acquired by a method other than those prescribed in the preceding two items: the sum of the following amounts:

the price normally required to acquire that asset at the time of that acquisition;

the amount of expenses directly required to put that asset to consumption or make it available for sale.

The acquisition price prescribed in the preceding paragraph of the Inventory listed in each of the following items is the amount specified in that item.

Inventory acquired by gift, inheritance, or bequest (excluding that acquired by a gift or bequest listed in Article 40, paragraph (1), item (i) (Inclusion of Gifts of Inventory in Gross Revenue) of the Act): the amount assessed, at the time of death of the decedent, by the method of valuation that the decedent was required to use for that asset;

Inventory acquired by a transfer listed in Article 40, paragraph (1), item (ii) of the Act: the amount obtained by adding the amount of expenses directly required to put that asset to consumption or make it available for sale to the sum of the amount of consideration for that transfer and the amount specified in that item.

The acquisition price, prescribed in paragraph (1), of agricultural products deemed to have been acquired pursuant to Article 41, paragraph (2) (Inclusion of Crop Harvests in Gross Revenue) of the Act, being the agricultural products prescribed in that paragraph, is the amount obtained by adding the amount of expenses directly required to put those agricultural products to consumption or make them available for sale to the value of the harvest prescribed in Article 41, paragraph (2) of the Act.

Where any of the following events has occurred with respect to Inventory held by a Resident, for the calculation of the assessed value of that asset pursuant to Article 99, paragraph (1) (Methods of Valuing Inventory) or Article 99-2, paragraph (1) (Special Methods of Valuing Inventory) for the year that includes the day on which the event occurred and each subsequent year, the value of that asset as of December 31 of that year may be treated as the acquisition price prescribed in paragraph (1) of the preceding Article.

that the asset has been seriously damaged by a Disaster;

that the asset has become significantly obsolete;

a special event equivalent to those in the preceding two items.

The methods of valuation that may be selected, pursuant to Article 48, paragraph (1) (Calculation of Costs of Transferred Securities and Valuation Methods) of the Act, for calculating the assessed value of Securities held on December 31 of that year (where the Resident referred to in that paragraph dies or begins an Absence From Japan during the year, the time of that death or of the start of that Absence From Japan; the same applies hereinafter in this Article) (hereinafter in this paragraph referred to as "year-end Securities") are methods of calculating the acquisition price of the year-end Securities by any one of the following methods and taking the acquisition price so calculated as the assessed value of those year-end Securities.

the total average method (meaning a method of distinguishing Securities by differences in kind and issue (hereinafter in this paragraph referred to as "types, etc."), and, for items of the same types, etc., taking as the acquisition price per unit the price calculated by dividing the sum of the total amount of the acquisition price of Securities of the same types, etc. held on January 1 of that year and the total amount of the acquisition price of Securities of the same types, etc. acquired during that year by the total number of those Securities);

the moving average method (meaning a method of distinguishing Securities by differences in types, etc., and, for items of the same types, etc., regarding the initial acquisition price per unit as having been revised, where Securities of the same types, etc. are acquired again, to the average unit price calculated on the basis of the numbers and acquisition prices of the Securities held at the time of that acquisition and the Securities so acquired, regarding the acquisition price per unit as having been revised by the same method each time Securities of the same types, etc. are acquired thereafter, and taking as the acquisition price per unit the acquisition price per unit regarded as having been revised on the day nearest to December 31 of that year).

In the case where, in the middle of a year, an event prescribed in Articles 110 through 116 (Acquisition Price of Shares, etc. in Cases of Share Splits, etc.) (hereinafter in this paragraph referred to as an "event") occurs with respect to shares held by a Resident (including capital contributions and investment units prescribed in Article 2, paragraph (14) (Definitions) of the Act on Investment Trusts and Investment Corporations) or beneficial interests in an Investment Trust or a Specified Trust That Issues Beneficiary Certificates, the day on which that event occurred (or, if events occurred two or more times during that year, the event on the day nearest to December 31 of that year) is deemed to be January 1 of that year, and the assessed value of those shares or beneficial interests under the provisions of the preceding paragraph is to be calculated for each year on or after that year.

The valuation method for Securities must be selected for each type of Securities.

In the case where a Resident has acquired Securities that give rise to business income (excluding the case where a notification under this paragraph is to be made, in a year preceding the year in which the date of acquisition falls or in an earlier year, regarding Securities of the same type as those Securities that give rise to business income), the Resident must notify the competent district director with jurisdiction over the place for tax payment in writing, by the Filing Deadline for the income tax for the year in which that date falls, of the valuation method to be used, from among the valuation methods prescribed in paragraph (1) of the preceding Article, regarding Securities of the same type as those Securities.

A Resident who intends to change the valuation method selected for Securities (including the valuation method prescribed in paragraph (1) of the following Article that a person who has not notified a valuation method is to use) must obtain the approval of the competent district director with jurisdiction over the place for tax payment.

The provisions of Article 101, paragraphs (2) through (5) (Procedures for Changing Inventory Valuation Methods) apply mutatis mutandis to the case referred to in the preceding paragraph.

The method specified by Cabinet Order prescribed in Article 48, paragraph (1) (Calculation of Costs of Transferred Securities and Valuation Methods) of the Act is the valuation method using the acquisition price calculated by the total average method set forth in Article 105, paragraph (1), item (i) (Total Average Method).

In the case where a Resident did not make a valuation by the valuation method the Resident selected for Securities (including the valuation method prescribed in the preceding paragraph that a Resident who has not notified a valuation method is to use; the same applies hereinafter in this paragraph), if a district director finds that the valuation method the Resident used falls under a valuation method prescribed in Article 105, paragraph (1) other than the valuation method the Resident selected, and that the Resident's amount of business income for each year can be properly calculated even by the valuation method the Resident used, the district director may make a Reassessment or determination on the basis of the amount of business income for each year calculated by the valuation method the Resident used.

Except as otherwise provided, the acquisition price of Securities that forms the basis for calculating the assessed value of Securities under Article 105, paragraph (1) (Valuation Methods for Securities) is, according to the category of Securities set forth in each of the following items, the amount specified in that item.

Securities acquired through payment of money (excluding those falling under item (iii)): the amount of the money paid (for Securities acquired through the exercise of a share option (including a subscription right for new investment units prescribed in Article 2, paragraph (17) (Definitions) of the Act on Investment Trusts and Investment Corporations; the same applies hereinafter in this item and item (iv)), the acquisition price of that share option is included, and if there are expenses required for the acquisition through that payment of money, the amount obtained by adding the amount of those expenses);

Specified restricted shares or succeeding restricted shares prescribed in Article 84, paragraph (1) (Value of Restricted Shares, etc.): the value, on the day on which the restriction on transfer prescribed in that paragraph was lifted on those specified restricted shares or succeeding restricted shares (if the individual referred to in that paragraph died before that day, for those specified restricted shares or succeeding restricted shares regarding which it had been confirmed, at the time of the individual's death, that they do not fall under the grounds prescribed in paragraph (2), item (ii) of that Article, the day of the individual's death);

Securities acquired through the exercise of a right set forth in the items of Article 84, paragraph (3) that was given by the issuing corporation, in the case where it falls under the provisions of that paragraph: the value of those Securities on the day of the exercise of that right (for Securities acquired through the exercise of a right set forth in item (iii) of that paragraph, the due date for payment or delivery based on that right (if a period for payment or delivery is specified, the day on which that payment or delivery was made));

Shares of an issuing corporation (including capital contributions and investment units (meaning investment units prescribed in Article 2, paragraph (14) of the Act on Investment Trusts and Investment Corporations; the same applies in paragraph (1) of the following Article); the same applies hereinafter in this Division) or share options acquired without requiring any new payment or delivery to that issuing corporation, which are those shares or share options given in the capacity of Shareholder, Member, or Other Investor of that issuing corporation (limited to the case where it is found that there is no risk of harming other Shareholders, Members, or Other Investors of that issuing corporation): zero;

Securities that have been purchased (excluding those falling under item (iii)): the purchase price (if there are purchase commissions or other expenses required for the purchase of those Securities, the amount obtained by adding the amount of those expenses);

Securities other than the Securities set forth in the preceding items: the amount normally required for acquiring those Securities at the time of their acquisition.

The acquisition price prescribed in the preceding paragraph of the Securities set forth in each of the following items is the amount specified in that item.

Securities acquired by gift, inheritance, or bequest (excluding those acquired through a gift or bequest set forth in Article 40, paragraph (1), item (i) (Inclusion of Gifts of Inventory in Gross Revenue) of the Act): the amount valued, at the time of the death of the decedent, by the valuation method that the decedent was to use for those Securities;

Securities acquired through a transfer set forth in Article 40, paragraph (1), item (ii) of the Act: the sum of the amount of the consideration for that transfer and the amount specified in that item.