Order for Enforcement of the Income Tax Act

If a Depreciable Asset that a Resident holds (excluding the Depreciable Assets set forth in Article 120, paragraph (1), item (vi) and Article 120-2, paragraph (1), item (vi) (Depreciation Methods for Depreciable Assets)) comes to fall under a case set forth in one of the following items, the amount to be 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 that includes the day on which it came to fall under that case is, notwithstanding the provisions of the preceding Article, the amount specified in the relevant item.

in the case where the asset is put to use in the middle of the year for business that is to generate real property income, business income, timber income or miscellaneous income (excluding a case that falls under the case set forth in the following item): the amount specified in each of the following according to the following categories of assets;

a Depreciable Asset for which the former straight-line method, former declining-balance method, straight-line method, declining-balance method or replacement method has been adopted as the method of depreciation to be followed (for one for which the replacement method has been adopted, excluding one that falls under a new asset prescribed in Article 121, paragraph (2), item (ii) (Special Provisions on Method of Depreciation for Replacement Assets); the same applies in (a) of the following item and in item (iii), (a)): the amount calculated by dividing the amount equivalent to the amount of the depreciation allowance for that year under the provisions of the preceding Article, calculated for that asset by those methods, by twelve, and multiplying the result by the number of months in the period from the day on which it was put to use for that business to December 31 of that year (or, if that person died or started an Absence From Japan in the middle of the year, the day of that death or of the start of that Absence From Japan; the same applies hereinafter in this paragraph);

a Depreciable Asset for which the former Units-of-production Method, the Units-of-production Method or the Units-of-production Method, etc. has been adopted as the method of depreciation to be followed: the amount calculated by dividing the amount equivalent to the amount of the depreciation allowance for that year under the provisions of the preceding Article, calculated for that asset by those methods, by the quantity extracted or quantity injected in that year in the mining area or storage area to which the asset belongs, and multiplying the result by the quantity extracted or quantity injected in that mining area or storage area during the period from the day on which it was put to use for that business to December 31 of that year;

a Depreciable Asset for which the method of depreciation prescribed in Article 120-3, paragraph (1) (Special Methods of Depreciation of Depreciable Assets) that has been approved by the competent district director with jurisdiction over the place for tax payment has been adopted as the method of depreciation to be followed: the amount calculated in accordance with the provisions of (a) or (b), according to which of the methods of depreciation prescribed in (a) or (b) the approved method of depreciation resembles;

in the case where the asset is put to a use other than the business set forth in the preceding item in the middle of the year: the amount specified in each of the following according to the following categories of assets;

a Depreciable Asset for which the former straight-line method, former declining-balance method, straight-line method, declining-balance method or replacement method has been adopted as the method of depreciation to be followed: the amount calculated by dividing the amount equivalent to the amount of the depreciation allowance for that year under the provisions of the preceding Article, calculated for that asset by those methods, by twelve, and multiplying the result by the number of months in the period from January 1 of that year (or, if the asset was put to use for that business in the middle of the year, the day on which it was put to use for that business; the same applies hereinafter in this paragraph) to the day on which it was put to a use other than that business;

a Depreciable Asset for which the former Units-of-production Method, the Units-of-production Method or the Units-of-production Method, etc. has been adopted as the method of depreciation to be followed: the amount calculated by dividing the amount equivalent to the amount of the depreciation allowance for that year under the provisions of the preceding Article, calculated for that asset by those methods, by the quantity extracted or quantity injected in that year in the mining area or storage area to which the asset belongs, and multiplying the result by the quantity extracted or quantity injected in that mining area or storage area during the period from January 1 of that year to the day on which it was put to a use other than that business;

a Depreciable Asset for which the method of depreciation prescribed in Article 120-3, paragraph (1) that has been approved by the competent district director with jurisdiction over the place for tax payment has been adopted as the method of depreciation to be followed: the amount calculated in accordance with the provisions of (a) or (b), according to which of the methods of depreciation prescribed in (a) or (b) the approved method of depreciation resembles;

in the case where the Resident who holds the asset dies or makes an Absence From Japan in the middle of the year (excluding a case that falls under a case set forth in the preceding two items): the amount specified in each of the following according to the following categories of assets.

a Depreciable Asset for which the former straight-line method, former declining-balance method, straight-line method, declining-balance method or replacement method has been adopted as the method of depreciation to be followed: the amount calculated by dividing the amount equivalent to the amount of the depreciation allowance for that year under the provisions of the preceding Article, calculated for that asset by those methods, by twelve, and multiplying the result by the number of months in the period from January 1 of that year to the day of that death or Absence From Japan;

a Depreciable Asset for which the former Units-of-production Method, the Units-of-production Method or the Units-of-production Method, etc. has been adopted as the method of depreciation to be followed: the amount calculated by dividing the amount equivalent to the amount of the depreciation allowance for that year under the provisions of the preceding Article, calculated for that asset by those methods, by the quantity extracted or quantity injected in that year in the mining area or storage area to which the asset belongs, and multiplying the result by the quantity extracted or quantity injected in that mining area or storage area during the period from January 1 of that year to the day of that death or Absence From Japan;

a Depreciable Asset for which the method of depreciation prescribed in Article 120-3, paragraph (1) that has been approved by the competent district director with jurisdiction over the place for tax payment has been adopted as the method of depreciation to be followed: the amount calculated in accordance with the provisions of (a) or (b), according to which of the methods of depreciation prescribed in (a) or (b) the approved method of depreciation resembles.

The number of months in each item of the preceding paragraph is to be calculated according to the calendar, and where a fraction of less than one month arises, it is to be treated as one month.

Where the hours of use of machinery and equipment that a Resident who submits a Blue Return holds (limited to those for which the former straight-line method, former declining-balance method, straight-line method or declining-balance method has been adopted as the method of depreciation to be followed) exceed the average hours of use of that machinery and equipment under the normal economic conditions of the Resident's business that is to generate real property income, business income or timber income, and the Resident has submitted to the competent district director with jurisdiction over the place for tax payment, by the Filing Deadline for income tax for that year, a document stating that the Resident intends to treat as the amount of the depreciation allowance of that machinery and equipment for that year the sum of the amount of the depreciation allowance of that machinery and equipment for that year and the amount calculated by multiplying that amount of depreciation allowance by the additional depreciation ratio calculated, as provided by Ministry of Finance Order, as corresponding to the degree of wear and tear from use beyond that average hours of use of that machinery and equipment, and other particulars specified by Ministry of Finance Order, and retains documents certifying that the machinery and equipment was used beyond those average hours of use, the amount to be included in necessary expenses as the depreciation allowance of that machinery and equipment in calculating the amount of real property income, amount of business income or amount of timber income for that year is, notwithstanding the provisions of the preceding two Articles, that sum; provided, however, that this does not apply where that additional depreciation ratio is less than 10 percent.