Order for Enforcement of the Income Tax Act

Where Article 33, paragraph (1) (Capital Gains) of the Act applies to the establishment (including an act of causing another person to use the land pertaining to a land leasehold right; the same applies hereinafter in this Article) of a land leasehold right or servitude prescribed in Article 79, paragraph (1) (Acts Deemed to Be Transfers of Assets) (hereinafter in this Article referred to as "land leasehold right, etc."), the acquisition cost to be deducted in the calculation of the amount of capital gains pertaining to that establishment is the amount calculated by multiplying the sum of the amount required for the acquisition of the land on which that land leasehold right, etc. was established and the amount of improvement expenses by the proportion that the amount listed in item (i) accounts for in the amount listed in item (ii).

The amount received as consideration for the establishment of that land leasehold right, etc.; and

The sum of the amount listed in the preceding item and the value as land subject to a leasehold (meaning the land on which that land leasehold right, etc. has been established; hereinafter in this Article referred to as "land subject to a leasehold") (where that land is used solely for the use for which the land leasehold right, etc. was established, the value as land subject to a leasehold is unclear, and there is ground rent received by reason of the establishment of that land leasehold right, etc., the amount equivalent to 20 times the annual amount of that ground rent).

Where a land leasehold right, etc. has been further established in favor of another person on land on which a land leasehold right, etc. has been established, if there is an amount treated as acquisition cost under the preceding paragraph for the earlier establishment of the land leasehold right, etc., then for the application of that paragraph to the establishment of the land leasehold right, etc. in favor of that other person, the sum of the amount required for the acquisition and the amount of improvement expenses prescribed in that paragraph pertaining to that land is the amount obtained by deducting the amount treated as acquisition cost from the amount equivalent to that sum.

Where paragraph (1) applies, if no land leasehold right, etc. is currently established on land on which a land leasehold right, etc. was previously established, and there is acquisition cost that was deducted under that paragraph in the calculation of the amount of capital gains pertaining to the establishment of that earlier land leasehold right, etc., then, except where consideration was paid for the extinguishment of that earlier land leasehold right, etc. (including the right pertaining to the use referred to in that paragraph; the same applies hereinafter in this paragraph), the acquisition cost prescribed in paragraph (1) is the amount obtained by deducting the amount equivalent to the deducted acquisition cost from the amount calculated under that paragraph for the land leasehold right, etc. referred to in that paragraph.

Where paragraph (1) applies, if the land pertaining to the establishment of that land leasehold right, etc. has been continuously owned since on or before December 31, 1952, the sum of the amount required for the acquisition and the amount of improvement expenses prescribed in that paragraph pertaining to that land is the amount equivalent to the sum of the amount calculated for that land under Article 172, paragraphs (1) and (2) (Acquisition Cost of Assets Acquired on or before December 31, 1952) and the amount of improvement expenses expended on or after January 1, 1953.

Where Article 33, paragraph (1) (Capital Gains) of the Act has applied to the establishment (including an act of causing another person to use the land pertaining to a land leasehold right; the same applies hereinafter in this Article) of a land leasehold right, etc. prescribed in paragraph (1) of the preceding Article (hereinafter in this Article referred to as "land leasehold right, etc.") and the land on which that land leasehold right, etc. was established is transferred, for the application of Article 33, paragraph (1) of the Act, a transfer of the portion equivalent to the land subject to a leasehold prescribed in paragraph (1), item (ii) of the preceding Article pertaining to that land (hereinafter in this Article referred to as "land subject to a leasehold") is deemed to have occurred, and the acquisition cost to be deducted in the calculation of the amount of capital gains pertaining to that transfer is the amount obtained by deducting, from the sum of the amount required for the acquisition of the land and the amount of improvement expenses prescribed in paragraph (1) of the preceding Article, the amount equivalent to the acquisition cost deducted under that paragraph in the calculation of the amount of capital gains pertaining to the establishment of that land leasehold right, etc.

Where a person to whom Article 80 (Special Economic Benefits Treated as Consideration for the Establishment, etc. of Land Leasehold Rights) has applied with regard to the establishment of a land leasehold right, etc. has repaid, in whole or in part, the portion, out of the amount of the loan received as referred to in paragraph (1) of that Article, that was added under that paragraph to the amount of consideration for that establishment, or has otherwise returned, in whole or in part, the special economic benefit prescribed in that paragraph, if that return results in an increase in the ground rent for the land pertaining to the land leasehold right, etc., the removal of a building or structure existing on that land, or any other increase in the value of the land subject to a leasehold of that land, the amount equivalent to the amount of the benefit returned is to be added to the sum of the amount required for the acquisition of the land on which that establishment was made and the amount of improvement expenses.

Where Article 33, paragraph (1) (Capital Gains) of the Act applies to the sublease (including an act of causing another person to use that land; the same applies hereinafter in this Article) of land pertaining to a land leasehold right prescribed in Article 79, paragraph (1) (Acts Deemed to Be Transfers of Assets) (hereinafter in this Article referred to as "land leasehold right"), the acquisition cost to be deducted in the calculation of the amount of capital gains pertaining to that sublease is the amount calculated by multiplying the sum of the amount required for the acquisition of the land leasehold right pertaining to the land subleased and the amount of improvement expenses by the proportion that the amount listed in item (i) accounts for in the amount listed in item (ii).

The amount received as consideration for the sublease of the land pertaining to that land leasehold right; and

The sum of the amount listed in the preceding item and the value, immediately after that sublease, of the land leasehold right pertaining to the land subleased (where the land pertaining to that sublease is used solely for the use for which the sublease was made, the value of that land leasehold right is unclear, and there is ground rent paid by reason of that sublease that is delivered to the holder of that land leasehold right, the amount equivalent to 20 times the annual amount of the ground rent delivered to that person).

Where the preceding paragraph applies, if the right pertaining to a previous sublease of land has presently been extinguished, and there is acquisition cost that was deducted under that paragraph in the calculation of the amount of capital gains pertaining to that previous sublease, then, except where consideration was paid for the extinguishment of the right pertaining to that previous sublease, the acquisition cost prescribed in that paragraph is the amount obtained by deducting the amount equivalent to the deducted acquisition cost from the amount calculated under that paragraph for the land leasehold right referred to in that paragraph.

Where paragraph (1) applies, if the land leasehold right pertaining to the subleased land prescribed in that paragraph has been continuously owned since on or before December 31, 1952, the sum of the amount required for the acquisition and the amount of improvement expenses prescribed in that paragraph pertaining to that land leasehold right is the amount equivalent to the sum of the amount calculated for that land leasehold right under Article 172, paragraph (1) (Acquisition Cost of Assets Acquired on or before December 31, 1952) and the amount of improvement expenses expended on or after January 1, 1953.

Where the provisions of Article 33, paragraph (1) (Capital Gains) of the Act have applied to the sublease (hereinafter in this Article referred to as "sublease") prescribed in paragraph (1) of the preceding Article of land pertaining to a land leasehold right prescribed in that paragraph (hereinafter in this Article referred to as "land leasehold right"), and a transfer of the land leasehold right pertaining to the land so subleased has taken place, for the purposes of the application of the provisions of Article 33, paragraph (1) of the Act, the acquisition cost to be deducted in calculating the amount of capital gains pertaining to that transfer is the amount obtained by deducting, from the sum of the amount required for the acquisition of the land leasehold right prescribed in paragraph (1) of the preceding Article and the amount of improvement expenses, the amount equivalent to the acquisition cost deducted pursuant to the provisions of that paragraph in calculating the amount of capital gains pertaining to that sublease.

Where a person to whom the provisions of Article 80 (Special Economic Benefits Treated as Consideration for Establishment, etc. of a Land Leasehold Right) have applied with respect to the sublease of land pertaining to a land leasehold right has repaid all or part of the amount of the loan received under paragraph (1) of that Article that was added to the amount of consideration for that sublease pursuant to the provisions of that paragraph, or has otherwise returned all or part of the special economic benefit prescribed in that paragraph, and as a result of that return there has been an increase in the value of the land leasehold right pertaining to the land so subleased, such as an increase in the royalty pertaining to that sublease or the removal of a building or structure situated on that land, the amount equivalent to the amount of the benefit returned is to be added to the sum of the amount required for the acquisition of the land leasehold right pertaining to the land so subleased and the amount of improvement expenses.

The assets specified by Cabinet Order prescribed in Article 62, paragraph (1) (Loss of Assets Not Ordinarily Necessary in Everyday Life, Due to Disaster) of the Act are the following assets.

racehorses (excluding those used for a business recognized as such in light of its scale, state of profits, and other circumstances) and other movables that serve as a means of speculative acts;

a house that is not ordinarily used as a residence by oneself or by relatives who share a livelihood with oneself and that is owned mainly for the purpose of use for hobby, recreation, or relaxation, and other assets owned mainly for the purpose of hobby, recreation, relaxation, or appreciation (excluding the movables set out in the preceding item or the following item);

movables used for everyday life that do not fall under the provisions of Article 25 (Scope of Movables for Everyday Use That Are Exempt from Tax on Capital Gains).

Where, pursuant to Article 62, paragraph (1) of the Act, the amount of losses prescribed in that paragraph suffered on assets not ordinarily necessary in everyday life prescribed in that paragraph is deemed to be an amount to be deducted in calculating the amount of capital gains for the year that includes the date on which they arose and for the following year, it is as provided in the following items.

First, the amount of those losses is to be an amount to be deducted in calculating the amount of the income set out in Article 33, paragraph (3), item (i) (Capital Gains) of the Act for the year that includes the date on which they arose, and where there is an amount of losses that cannot be fully deducted in calculating the amount of that income, it is to be an amount to be deducted in calculating the amount of the income set out in item (ii) of that paragraph for that year;

where there is still an amount of losses that cannot be fully deducted under the provisions of the preceding item, it is to be an amount to be deducted in calculating the amount of the income set out in Article 33, paragraph (3), item (i) of the Act for the year following the year that includes the date on which they arose, and where there is still an amount of losses that cannot be fully deducted, it is to be an amount to be deducted in calculating the amount of the income set out in item (ii) of that paragraph for that following year.

The value of an asset not ordinarily necessary in everyday life prescribed in Article 62, paragraph (1) of the Act, which serves as the basis for calculating the amount of losses suffered on that asset, is the amount set out in each of the following items for the category of assets set out in that item.

Assets prescribed in Article 38, paragraph (1) (Acquisition Costs Deducted to Calculate Capital Gains) of the Act (excluding those set out in the following item): the amount equivalent to the amount that would be treated as the acquisition cost of the asset if the asset were deemed to have been the subject of a transfer of assets on the date on which the loss arose and the provisions of that paragraph (where the asset has been owned continuously since on or before December 31, 1952, the provisions of Article 61, paragraph (2) (Acquisition Cost of Assets Acquired on or Before December 31, 1952) of the Act) were applied;

Assets prescribed in Article 38, paragraph (2) of the Act: the amount equivalent to the amount that would be treated as the acquisition cost of the asset if the asset were deemed to have been the subject of a transfer of assets on the date on which the loss arose and the provisions of that paragraph (where the asset has been owned continuously since on or before December 31, 1952, the provisions of Article 61, paragraph (3) of the Act) were applied.