Order for Enforcement of the Income Tax Act

The deduction in the order specified by Cabinet Order under Article 69, paragraph (1) (Aggregation of Profits and Losses) of the Act is as provided in the following.

if there is an amount of loss arising in the calculation of the amount of real property income or the amount of business income, it is first deducted from the other amount of interest income, amount of dividend income, amount of real property income, amount of business income, amount of salary income and amount of miscellaneous income (hereinafter in this Article referred to as the "amount of ordinary income").

if there is an amount of loss arising in the calculation of the amount of capital gains, it is first deducted from the amount of occasional income.

in the case referred to in item (i), if there is an amount of loss that still cannot be fully deducted even after the deduction under the provisions of that item, it is deducted in order from the amount of capital gains or the amount of occasional income (where the deduction under the provisions of the preceding item is made, the amount after the deduction under the provisions of that item). In this case, if the amount of capital gains includes a portion pertaining to the income set out in Article 33, paragraph (3), item (i) (Amount of Capital Gains) of the Act and a portion pertaining to the income set out in item (ii) of that paragraph, it is first deducted from the amount of capital gains of the portion pertaining to the income set out in item (i) of that paragraph.

in the case referred to in item (ii), if there is an amount of loss that still cannot be fully deducted even after the deduction under the provisions of that item, it is deducted from the amount of ordinary income (where the deduction under the provisions of item (i) is made, the amount after the deduction under the provisions of that item).

in the case referred to in item (i) or (ii), if there is an amount of loss that still cannot be fully deducted even after the deduction under the provisions of the preceding items, it is first deducted from the amount of timber income, and if there is still an amount of loss that cannot be fully deducted, it is deducted from the amount of retirement income.

if there is an amount of loss arising in the calculation of the amount of timber income, it is first deducted from the amount of ordinary income (where the deduction under the provisions of item (i) or (iv) is made, the amount after the deduction under those provisions), if there is still an amount of loss that cannot be fully deducted, it is deducted in order from the amount of capital gains or the amount of occasional income (where the deduction under the provisions of item (ii) or (iii) is made, the amount after the deduction under those provisions), and if there is still an amount of loss that cannot be fully deducted, it is deducted from the amount of retirement income (where the deduction under the provisions of the preceding item is made, the amount after the deduction under the provisions of that item). In this case, the provisions of the second sentence of item (iii) apply mutatis mutandis.

In the case referred to in the preceding Article, if the amount of loss arising in the calculation of the amount of real property income, the amount of business income or the amount of timber income includes two or more of the amount of loss arising in the calculation of the amount of Fluctuating Income set out in Article 70, paragraph (2), item (i) (Deduction for Carryover of Net Loss) of the Act (hereinafter in this Article referred to as the "amount of loss from Fluctuating Income"), the amount of loss on disaster-damaged business assets set out in item (ii) of that paragraph (hereinafter in this Article referred to as the "amount of loss on disaster-damaged business assets"), and any other amount of loss, the order of deduction of those amounts of loss is as provided in the following.

if the amount of loss arising in the calculation of the amount of real property income or the amount of business income includes two or more of the amount of loss from Fluctuating Income, the amount of loss on disaster-damaged business assets, and any other amount of loss, the other amount of loss is deducted first, and then the amount of loss on disaster-damaged business assets and the amount of loss from Fluctuating Income are deducted in that order;

if the amount of loss arising in the calculation of the amount of timber income includes both the amount of loss on disaster-damaged business assets and any other amount of loss, the other amount of loss is deducted first, and then the amount of loss on disaster-damaged business assets is deducted.

The amount of loss specified by Cabinet Order prescribed in Article 69, paragraph (2) (Losses Not Subject to Aggregation of Profits and Losses) of the Act is the amount of loss arising in the calculation of the amount of capital gains pertaining to the transfer of a racehorse prescribed in Article 178, paragraph (1), item (i) (Calculation, etc. of the Amount of Loss Caused by a Disaster to Assets Not Ordinarily Necessary for Daily Life).

If the amount of loss arising in the calculation of the amount of capital gains includes an amount of loss pertaining to the transfer of a racehorse prescribed in the preceding paragraph, that amount of loss is deducted from the amount of miscellaneous income pertaining to the holding of that racehorse.

The deduction of the amount of Net Loss under Article 70, paragraph (1) or (2) (Deduction for Carryover of Net Loss) of the Act is as provided in the following.

if the amount of Net Loss to be deducted arose in two or more years within the three years up to and including the previous year (within the five years up to and including the previous year where Article 70-2, paragraphs (1) through (3) (Special Provisions on Deduction for Carryover of Net Loss Related to a Specified Extraordinary Disaster) of the Act apply; the same applies in the following item), it is deducted in order starting from the amount of Net Loss that arose in the oldest of those years.

the deduction of the amount of Net Loss that arose in one year within the three years up to and including the previous year is as provided in the following.

if the amount of Net Loss includes the amount of the portion of loss arising in the calculation of gross income (meaning the amount of loss that still cannot be fully deducted even after the deduction under Article 198, items (i) through (v) (Order of Aggregation of Profits and Losses); the same applies in (c)), it is first deducted from the amount of gross income for that year.

if the amount of Net Loss includes the amount of the portion of loss arising in the calculation of the amount of timber income (meaning the amount of loss that still cannot be fully deducted even after the deduction under Article 198, item (vi); the same applies in (d)), it is first deducted from the amount of timber income for that year.

the amount of the portion of loss arising in the calculation of gross income that still cannot be fully deducted even after the deduction under the provisions of (a) is deducted from the amount of timber income for that year (where the deduction under the provisions of (b) is made, the amount after that deduction), and then from the amount of retirement income.

the amount of the portion of loss arising in the calculation of the amount of timber income that still cannot be fully deducted even after the deduction under the provisions of (b) is deducted from the amount of gross income for that year (where the deduction under the provisions of (a) is made, the amount after that deduction), and then from the amount of retirement income (where the deduction under the provisions of (c) is made, the amount after that deduction).

if there is an amount of loss arising in the calculation of the amount of Income in Each Class for that year, the deduction under the provisions of Article 70, paragraph (1) or (2) of the Act is made after first making the deduction under the provisions of Article 69 (Aggregation of Profits and Losses) of the Act.

In the case where the provisions of the preceding paragraph apply, if the year in which the amount of other Net Loss of that person (meaning the amount of Net Loss other than the Net Loss in the year of a specified extraordinary Disaster, the Net Loss from Disaster damage to business assets and the specified Net Loss in the year of a specified extraordinary Disaster prescribed in Article 70-2, paragraphs (1) through (3) of the Act (hereinafter in this paragraph and Article 204, paragraph (3) (Deduction for Carryover of Casualty Loss) referred to as "Net Loss subject to the special provisions"); the same applies hereinafter in this paragraph and Article 204, paragraph (3)) arose is the year in which the Net Loss subject to the special provisions of that person arose or the following year, the deduction under the provisions of the preceding paragraph is made by treating that amount of other Net Loss as having arisen in an earlier year than that Net Loss subject to the special provisions.