Order for Enforcement of the Income Tax Act

Where, for a Depreciable Asset set forth in the following items that a Resident holds, the sum of the cumulative amount of the amounts included in necessary expenses as the depreciation allowance of that asset in calculating the Resident's amount of real property income, amount of business income, amount of timber income or amount of miscellaneous income for the year preceding that year and earlier years and the amount equivalent to the amount of the depreciation allowance for that year calculated for that Depreciable Asset by the method of depreciation prescribed in the relevant item exceeds the amount specified in the relevant item according to the category of Depreciable Asset set forth in that item, then, for that Depreciable Asset, notwithstanding the provisions of Article 131 through the preceding Article, the amount obtained by deducting the excess portion from the amount equivalent to that amount of depreciation allowance is the amount of depreciation allowance for that year.

those acquired on or before March 31, 2007 (in the case of the Depreciable Assets set forth in (d) and (e), those for which the contract pertaining to the pre-amendment lease transaction prescribed in Article 120, paragraph (1), item (vi) (Methods of Depreciation of Depreciable Assets) for that Depreciable Asset was concluded by March 31, 2008), for which the former straight-line method, former declining-balance method, former units-of-production method, former overseas lease period straight-line method, the method of depreciation prescribed in Article 120-3, paragraph (1) (Special Methods of Depreciation of Depreciable Assets) or the former lease period straight-line method prescribed in Article 121-2, paragraph (1) (Special Provisions on Method of Depreciation for Lease Rental Assets) has been adopted as the method of depreciation to be followed: the amount specified in each of the following according to the following categories of assets;

Depreciable Assets set forth in Article 6, items (i) through (vii) (Scope of Depreciable Assets) (excluding mine shafts and the Depreciable Assets set forth in (d) and (e)): the amount equivalent to 95 percent of the acquisition price (meaning the acquisition price that serves as the basis for calculating the amount of the depreciation allowance of the Depreciable Asset, and, where the provisions of Article 130, paragraph (9) (Shortening of Useful Life) apply, the amount that would be the acquisition price serving as the basis for calculating the depreciation allowance of the Depreciable Asset if the provisions of that paragraph did not apply; the same applies hereinafter in this Article and in paragraph (1) of the following Article);

mine shafts and the intangible Fixed Assets set forth in Article 6, item (viii) (excluding the Depreciable Assets set forth in (e)): the amount equivalent to the acquisition price;

living things set forth in Article 6, item (ix) (excluding the Depreciable Assets set forth in (e)): the amount equivalent to the amount obtained by deducting from the acquisition price the residual value specified by Ministry of Finance Order prescribed in Article 129 (Residual Value, etc. of Depreciable Assets) for the living things;

the Depreciable Assets set forth in Article 120, paragraph (1), item (vi): the amount equivalent to the amount obtained by deducting from the acquisition price the estimated residual value prescribed in that item for that Depreciable Asset;

lease rental assets prescribed in Article 121-2, paragraph (1) to which that paragraph applies: the amount equivalent to the amount obtained by deducting from the acquisition price the guaranteed residual value prescribed in paragraph (3) of that Article for that lease rental asset (or one yen where that guaranteed residual value is zero);

those acquired on or after April 1, 2007 (in the case of the Depreciable Assets set forth in Article 120-2, paragraph (1), item (vi) (Methods of Depreciation of Depreciable Assets), those for which the contract pertaining to the lease transaction without transfer of ownership prescribed in paragraph (2), item (v) of that Article (referred to as a "lease transaction without transfer of ownership" in (c)) for that Depreciable Asset was concluded on or after April 1, 2008), for which the straight-line method, declining-balance method, Units-of-production Method, Units-of-production Method, etc., lease period straight-line method or the method of depreciation prescribed in Article 120-3, paragraph (1) has been adopted as the method of depreciation to be followed: the amount specified in each of the following according to the following categories of assets.

Depreciable Assets set forth in Article 6, items (i) through (vii) and item (ix) (excluding mine shafts and the Depreciable Assets set forth in (c)): the amount equivalent to the amount obtained by deducting one yen from the acquisition price;

mine shafts and the intangible Fixed Assets set forth in Article 6, item (viii): the amount equivalent to the acquisition price;

the Depreciable Assets set forth in Article 120-2, paragraph (1), item (vi) (limited to those for which the contract pertaining to the lease transaction without transfer of ownership for that Depreciable Asset was concluded on or before March 31, 2027): the amount equivalent to the amount obtained by deducting from the acquisition price the guaranteed residual value prescribed in paragraph (2), item (vi) of that Article for that Depreciable Asset.

Where the cumulative amount of the amounts included in necessary expenses, as the depreciation allowance of a Depreciable Asset set forth in item (i), (a) or (c) of the preceding paragraph that a Resident holds (limited to one for which the method of depreciation prescribed in that item has been adopted as the method of depreciation to be followed), in calculating the Resident's amount of real property income, amount of business income, amount of timber income or amount of miscellaneous income for the year preceding that year and earlier years has reached the amount provided for in (a) or (c) of that item for that Depreciable Asset, then, for that Depreciable Asset, notwithstanding the provisions of Article 131 through the preceding Article and paragraph (1), the amount calculated by dividing by five the amount obtained by deducting the amount provided for in (a) or (c) of that item and one yen from the acquisition price of that Depreciable Asset (or, where the sum of that calculated amount and the cumulative amount of the amounts included in necessary expenses, as the depreciation allowance of that Depreciable Asset, in calculating the Resident's amount of real property income, amount of business income, amount of timber income or amount of miscellaneous income for the year preceding that year and earlier years exceeds the amount obtained by deducting one yen from the acquisition price of that Depreciable Asset, the amount obtained by deducting the excess portion) is the amount of the depreciation allowance for that year.

The provisions of Article 132 (Special Provisions on Depreciation Allowance for Depreciable Assets, etc. Put to Business Use in the Middle of the Year) apply mutatis mutandis to a Depreciable Asset to which the provisions of the preceding paragraph apply. In this case, the phrase "the preceding Article" in paragraph (1) of that Article is deemed to be replaced with "Article 134, paragraph (2)".

Where, among the following Depreciable Assets that a Resident holds (limited to those to which the provisions of paragraph (1), item (i) of the preceding Article apply), one for which the cumulative amount of the amounts included in necessary expenses as its depreciation allowance in calculating the Resident's amount of real property income, amount of business income, amount of timber income or amount of miscellaneous income for the year preceding that year and earlier years has reached the amount equivalent to 95 percent of its acquisition price is still being used for the Resident's business that is to generate such income, then, notwithstanding the provisions of Article 131 through the preceding Article, only while that asset is still being used for that business, the amount calculated by dividing the amount obtained by deducting one yen from the amount equivalent to 5 percent of the acquisition price of that asset by the number of years equivalent to three-tenths of the useful life specified by Ministry of Finance Order prescribed in Article 129 (Useful Life, Depreciation Rates, etc. of Depreciable Assets) for that asset may be included in necessary expenses as the depreciation allowance of that asset 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 on or after that year; provided, however, that this does not apply to the excess portion where the cumulative amount of that depreciation allowance has come to exceed the amount equivalent to the amount obtained by deducting that one yen.

buildings of reinforced steel-framed concrete construction, reinforced concrete construction, brick construction, stone construction or block construction;

structures or equipment of reinforced steel-framed concrete construction, reinforced concrete construction, concrete construction, brick construction, stone construction or earthen construction.

Where, in calculating the number of years equivalent to three-tenths of the useful life under the provisions of the preceding paragraph, a fraction of less than one year arises, it is to be treated as one year.

The provisions of Article 132 (Special Provisions on Depreciation Allowance for Depreciable Assets, etc. Put to Business Use in the Middle of the Year) apply mutatis mutandis to a Depreciable Asset to which the provisions of paragraph (1) apply. In this case, the phrase "the preceding Article" in paragraph (1) of that Article is deemed to be replaced with "Article 134-2, paragraph (1)".

Where a Resident puts a house or other asset that the Resident holds, which depreciates through use or the passage of time and has not been used for business that is to generate real property income, business income, timber income or miscellaneous income, to use for that business (excluding a case that falls under the provisions of the following Article), the amount of the depreciation allowance of that asset after it is put to use for that business is to be calculated by treating, as the value of that asset after depreciation on the day on which it was put to use for that business, the amount equivalent to the amount that would be treated as the acquisition cost of that asset if that asset were deemed to have been the subject of a transfer of assets on that day and the provisions of Article 38, paragraph (2) (Acquisition Costs Deducted to Calculate Capital Gains) of the Act were applied, and the amount equivalent to the difference between the acquisition price of that asset calculated in accordance with the provisions of Article 126 (Acquisition Price of Depreciable Assets) and Article 127, paragraph (2) (Special Provisions on Acquisition Price of Capital Expenditure) and that value after depreciation is, for the application of the provisions of Article 134 (Special Provisions on Depreciation Allowance Based on Cumulative Amount of Depreciation of Depreciable Assets) and the preceding Article, deemed to be an amount that has been included in necessary expenses as the depreciation allowance of that asset 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.

Where a Resident puts an asset prescribed in the preceding Article that the Resident has continuously owned since on or before December 31, 1952 to use for the business set forth in that Article, the amount of the depreciation allowance of that asset after it is put to use for that business is to be calculated by treating, as the value of that asset after depreciation on the day on which it was put to use for that business, the amount equivalent to the amount that would be treated as the acquisition cost of that asset if that asset were deemed to have been the subject of a transfer of assets on that day and the provisions of Article 61, paragraph (3) (Acquisition Costs of Assets Acquired Prior to December 31, 1952) of the Act were applied, and the amount equivalent to the difference between the acquisition price of that asset under the provisions of Article 128 (Acquisition Price of Non-Business Assets Acquired on or before December 31, 1952 That Have Been Put to Business Use) and that value after depreciation is, for the application of the provisions of Article 134 (Special Provisions on Depreciation Allowance Based on Cumulative Amount of Depreciation of Depreciable Assets) and Article 134-2 (Special Provisions on Depreciation Allowance for Solid Buildings, etc.), deemed to be an amount that has been included in necessary expenses as the depreciation allowance of that asset 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.

In addition to what is provided for in the preceding three Divisions (Methods of Depreciation, etc. of Depreciable Assets), the details concerning the calculation of the depreciation allowance of Depreciable Assets are specified by Ministry of Finance Order.

The amount calculated as provided by Cabinet Order prescribed in Article 50, paragraph (1) (Calculating Depreciation Allowances for Deferred Assets; Depreciation Methods) of the Act is, according to the categories of Deferred Assets set forth in the following items, the amount specified in the relevant item.

for Deferred Assets set forth in Article 7, paragraph (1), item (i) or (ii) (Scope of Deferred Assets): the amount calculated by dividing the amount of the Deferred Asset by 60 and multiplying the result by the number of months in the period during which the Resident conducted, in that year, business that is to generate real property income, business income, timber income or miscellaneous income (or, where that year is the year that includes the day on which the expenses that become that Deferred Asset were paid, the number of months in the period from that day to the last day of the period during which the Resident conducted that business) (or, where the amount so calculated exceeds the part of the amount of that Deferred Asset other than the amount already included in necessary expenses under the provisions of this paragraph in calculating the amount of real property income, amount of business income, amount of timber income or amount of miscellaneous income, that other amount; the same applies in the following item);

for Deferred Assets set forth in Article 7, paragraph (1), item (iii): the amount calculated by dividing the amount of the Deferred Asset by the number of months in the period over which the effect of the payment of the expenses that become that Deferred Asset extends, and multiplying the result by the number of months in the period during which the business prescribed in the preceding item was conducted.

The number of months set forth in the preceding paragraph is calculated according to the calendar; a division of less than one month is counted as one month.

Where a Resident has stated in the Tax Return for that year, as the amount to be included in necessary expenses in calculating the amount of real property income, amount of business income, amount of timber income or amount of miscellaneous income for that year with respect to a Deferred Asset set forth in paragraph (1), item (i), an amount within the range of the amount of that Deferred Asset, the amount set forth in that item is, notwithstanding the provisions of that item, the amount stated as that amount.