Order for Enforcement of the Income Tax Act

If a Resident who submits a Blue Return, where a Depreciable Asset that the Resident holds falls under any of the following grounds, has obtained approval from the competent regional commissioner with jurisdiction over the place for tax payment to calculate the amount of the depreciation allowance on the basis of the part of the usable period of that asset that has not yet elapsed (hereinafter in this paragraph through paragraph (4) referred to as the "remaining usable period"), the remaining usable period pertaining to that approval is deemed to be the useful life specified by Ministry of Finance Order prescribed in the preceding Article (hereinafter in this paragraph referred to as the "statutory useful life") for the purpose of calculating the amount of the depreciation allowance of that asset for each year on or after the year that includes the day on which that approval was obtained:

the usable period of the asset is significantly shorter than the statutory useful life because the material or manufacturing method of the asset differs significantly from the usual material or manufacturing method of other Depreciable Assets of the same kind and structure;

the usable period of the asset has become significantly shorter than the statutory useful life because the ground on which the asset stands has risen or subsided;

the usable period of the asset has become significantly shorter than the statutory useful life because the asset has become obsolete;

the usable period of the asset has become significantly shorter than the statutory useful life because the asset has significantly corroded owing to the conditions of the place where it is used;

the usable period of the asset has become significantly shorter than the statutory useful life because the asset has significantly deteriorated owing to a failure to carry out ordinary repair or maintenance;

the usable period of the asset is, or has become, significantly shorter than the statutory useful life owing to a ground specified by Ministry of Finance Order other than the grounds set forth in the preceding items.

A Resident who seeks the approval under the preceding paragraph must submit an application stating the type and name of the Depreciable Asset to which the Resident seeks to have that paragraph applied, the place where it is located, its usable period, its remaining usable period and other particulars specified by Ministry of Finance Order, with documents attached certifying that the asset falls under any of the grounds set forth in the items of the preceding paragraph, to the competent regional commissioner with jurisdiction over the place for tax payment via the competent district director with jurisdiction over the place for tax payment.

Where the application set forth in the preceding paragraph has been submitted, the regional commissioner is to examine it without delay and either grant the approval under paragraph (1) by recognizing the usable period and remaining usable period of the Depreciable Asset pertaining to the application, or by determining that usable period and remaining usable period, or dismiss the application.

After granting the approval under paragraph (1), if the regional commissioner finds that a special ground has arisen that makes it inappropriate to calculate the amount of the depreciation allowance of the Depreciable Asset under that paragraph on the basis of the remaining usable period pertaining to that approval, the regional commissioner may rescind that approval or extend the usable period and remaining usable period pertaining to that approval.

When taking a disposition under the preceding two paragraphs, the regional commissioner is to notify the Resident subject to that disposition to that effect in writing.

Where there has been a disposition of approval under paragraph (3) or a disposition under paragraph (4), the effect of that disposition is to arise with respect to the calculation of the amount of the depreciation allowance of the Depreciable Asset pertaining to that disposition, in calculating the amount of real property income, the amount of business income, the amount of timber income or the amount of miscellaneous income for each year on or after the year that includes the day of that disposition.

Where a Resident who submits a Blue Return has replaced part of a Depreciable Asset pertaining to the approval under paragraph (1) that the Resident holds with a new asset in place of it (hereinafter in this paragraph referred to as a "replacement asset"), or in any other case specified by Ministry of Finance Order, and has submitted a written notice stating the name of the replacement asset, the place where it is located and other particulars specified by Ministry of Finance Order to the competent regional commissioner with jurisdiction over the place for tax payment via the competent district director with jurisdiction over the place for tax payment by the Filing Deadline for income tax for the year that includes the day on which the replacement asset was acquired, that written notice is deemed to be the application under paragraph (2), and the submission of that written notice is deemed to have resulted in the approval under paragraph (1) on December 31 of the year that includes that day (or, if that person died or started an Absence From Japan in the middle of the year, at the time of that death or the start of that Absence From Japan; the same applies in the following paragraph). In this case, the provisions of paragraph (5) do not apply.

Where a Resident who submits a Blue Return has acquired a Depreciable Asset that has the same material or manufacturing method as a Depreciable Asset pertaining to the approval under paragraph (1) that the Resident holds (limited to an approval on the ground set forth in item (i) of that paragraph or an approval on another ground specified by Ministry of Finance Order) (or, in the case of an approval on a ground specified by that Ministry of Finance Order, a Depreciable Asset specified by Ministry of Finance Order), and has submitted a written notice stating the name of the Depreciable Asset acquired, the place where it is located and other particulars specified by Ministry of Finance Order to the competent regional commissioner with jurisdiction over the place for tax payment via the competent district director with jurisdiction over the place for tax payment by the Filing Deadline for income tax for the year that includes the day on which it was acquired, that written notice is deemed to be the application under paragraph (2), and the submission of that written notice is deemed to have resulted in the approval under paragraph (1) on December 31 of the year that includes that day. In this case, the provisions of paragraph (5) do not apply.

Where a Resident who submits a Blue Return has obtained the approval under paragraph (1) for a Depreciable Asset that the Resident holds, the cumulative amount of the amounts that were included in necessary expenses as the depreciation allowance of that asset in calculating the amount of real property income, the amount of business income, the amount of timber income or the amount of miscellaneous income for the year preceding the year that includes the day on which that approval was obtained and for earlier years is not to be included in the acquisition price of that asset prescribed in Article 120, paragraph (1), item (i), (a), (1) or item (iii), (c), or in Article 120-2, paragraph (1), item (i), (a), (1) or item (iii), (a), (2), or paragraph (2), item (i) (Depreciation Methods for Depreciable Assets).

The provisions of Article 134, paragraph (2) (Special Provisions on Depreciation Allowance Based on Cumulative Amount of Depreciation of Depreciable Assets) apply mutatis mutandis to the case where, for a Depreciable Asset pertaining to the approval under paragraph (1) (limited to one for which the declining-balance method has been adopted as the method of depreciation to be followed), the pre-adjustment depreciation amount prescribed in Article 120-2, paragraph (2), item (ii), (a), calculated for the year that includes the day on which that approval was obtained without applying paragraph (1), is less than the guaranteed depreciation amount prescribed in paragraph (2), item (i) of that Article, calculated without applying the preceding paragraph. In this case, the phrase "the amount provided for in (a) or (c) of that item and" in Article 134, paragraph (2) is deemed to be replaced with "the pre-approval cumulative amount of depreciation (meaning the amount that is not to be included in the acquisition price pursuant to the provisions of Article 130, paragraph (9)) and", and the phrase "by five" is deemed to be replaced with "by the number of years of the remaining usable period prescribed in Article 130, paragraph (1)".

Where a Resident who has obtained the approval under paragraph (1) has had the approval to submit a Blue Return rescinded, or has submitted a written notice to the effect that the Resident will cease filing under a Blue Return, the approval under that paragraph ceases to be effective on January 1 of the year that includes the day of the fact that was the cause of the rescission of the approval to submit a Blue Return, or of the year in which the Resident ceased. In this case, where the approval under that paragraph was obtained on or after that January 1, that approval is deemed not to have been given.

The amount to be included in necessary expenses as the depreciation allowance of a Depreciable Asset that a Resident holds, in calculating the Resident's amount of real property income, amount of business income, amount of timber income or amount of miscellaneous income for each year, is the amount calculated on the basis of the method of depreciation that the Resident has adopted for that asset.