Order for Enforcement of the Income Tax Act

The moving average method (meaning a method that distinguishes cryptoassets by each different type and, for those of the same type, deems the initial acquisition price per unit to be revised, where cryptoassets of the same type are acquired again, to the average unit price calculated on the basis of the quantity and acquisition price of the cryptoassets held at the time of that acquisition and the cryptoassets so acquired, deems the acquisition price per unit to be revised by the same method each time cryptoassets of the same type are acquired thereafter, and takes as the acquisition price per unit the acquisition price per unit deemed to have been revised on the day nearest to December 31 of that year).

The acquisition referred to in each item of the preceding paragraph does not include the acquisition in the case of acquiring cryptoassets, other than those cryptoassets, that are temporarily necessary when intending to purchase or sell cryptoassets or to exchange them for cryptoassets of a different type.

The valuation method for cryptoassets must be selected for each type of cryptoassets.

In the case where a Resident has acquired cryptoassets (excluding the case where a notification under this paragraph is to be made, in a year preceding the year in which the date of acquisition falls or in an earlier year, regarding cryptoassets of the same type as those cryptoassets), the Resident must notify the competent district director with jurisdiction over the place for tax payment in writing, by the Filing Deadline for the income tax for the year in which that date falls, of the valuation method to be used, from among the valuation methods prescribed in paragraph (1) of the preceding Article, regarding cryptoassets of the same type as those cryptoassets.

The provisions of paragraph (2) of the preceding Article apply mutatis mutandis to the acquisition prescribed in the preceding paragraph.

A Resident who intends to change the valuation method selected for cryptoassets (including the valuation method prescribed in paragraph (1) of the following Article that a person who has not notified a valuation method is to use) must obtain the approval of the competent district director with jurisdiction over the place for tax payment.

The method specified by Cabinet Order prescribed in Article 48-2, paragraph (1) (Calculation of Costs of Cryptoassets Transferred and Valuation Methods) of the Act is the valuation method using the acquisition price calculated by the total average method set forth in Article 119-2, paragraph (1), item (i) (Valuation Methods for Cryptoassets).

Except as otherwise provided, the acquisition price of cryptoassets that forms the basis for calculating the assessed value of cryptoassets under Article 119-2, paragraph (1) (Valuation Methods for Cryptoassets) is, according to the category of cryptoassets set forth in each of the following items, the amount specified in that item.

Cryptoassets that have been purchased: the purchase price (if there are purchase commissions or other expenses required for the purchase of those cryptoassets, the amount obtained by adding the amount of those expenses);

Cryptoassets acquired by issuing them oneself: the amount of expenses required for that issuance;

Cryptoassets other than the cryptoassets set forth in the preceding two items: the amount normally required for acquiring those cryptoassets at the time of their acquisition.

The acquisition price prescribed in the preceding paragraph of the cryptoassets set forth in each of the following items is the amount specified in that item.

Cryptoassets acquired by gift, inheritance, or bequest (excluding those acquired through a gift or bequest set forth in Article 40, paragraph (1), item (i) (Inclusion of Gifts of Inventory in Gross Revenue) of the Act): the amount valued, at the time of the death of the decedent, by the valuation method that the decedent was to use for those cryptoassets;

Cryptoassets acquired through a transfer set forth in Article 40, paragraph (1), item (ii) of the Act: the sum of the amount of the consideration for that transfer and the amount specified in that item.

In the case where a Resident has traded cryptoassets by a cryptoasset margin transaction (meaning the purchase and sale of cryptoassets conducted with credit extended by another person; the same applies hereinafter in this Article) and has settled that cryptoasset margin transaction by selling and buying cryptoassets in that cryptoasset margin transaction, the amount to be included in necessary expenses in calculating the amount of business income or the amount of miscellaneous income of that person for that year, as expenses required for acquiring the cryptoassets pertaining to that sale, is to be, notwithstanding Articles 119-2 through the preceding Article, the amount required for acquiring the cryptoassets pertaining to that purchase in that cryptoasset margin transaction.

The depreciation methods specified by Cabinet Order prescribed in Article 49, paragraph (1) (Calculating Depreciation Allowances for Depreciable Assets; Depreciation Methods) of the Act that may be selected in calculating the amount of the depreciation allowance (meaning the depreciation allowance for Depreciable Assets under that paragraph; the same applies hereinafter in this Subsection) for Depreciable Assets acquired on or before March 31, 2007 (for Depreciable Assets set forth in item (vi), those for which the contract pertaining to the pre-amendment lease transaction prescribed in item (vi) has been concluded by March 31, 2008) are the methods specified in the following items for the categories of assets set forth in the respective items.

Buildings (excluding those set forth in item (iii)): the methods specified in the following for the respective categories set forth below;

Buildings acquired on or before March 31, 1998: the following methods;

The former straight-line method (meaning a method of depreciating, as the depreciation allowance for each year, the amount calculated by multiplying the amount obtained by deducting the residual value from the acquisition price of the Depreciable Asset by the depreciation rate corresponding to the useful life of that asset such that the depreciation allowance is the same every year; the same applies hereinafter in this Division and Division 3 (Calculation of Depreciation Allowances));

The former declining-balance method (meaning a method of depreciating, as the depreciation allowance for each year, the amount calculated by multiplying the acquisition price of the Depreciable Asset (in the case of depreciation from the second year on, the amount obtained by deducting from that acquisition price the amount already included as depreciation allowance in necessary expenses 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) by the depreciation rate corresponding to the useful life of that asset such that the depreciation allowance declines at a constant rate every year; the same applies hereinafter in this Division and Division 3);

Buildings other than the buildings set forth in (a): the former straight-line method;

Associated facilities of buildings set forth in Article 6, item (i) (Scope of Depreciable Assets) and Depreciable Assets set forth in items (ii) through (vii) of that Article (excluding those set forth in the following item and item (vi)): the following methods;

The former straight-line method;

The former declining-balance method;

Depreciable Assets for mining (excluding those set forth in items (v) and (vi)): the following methods;

The former straight-line method;

The former declining-balance method;

The former units-of-production method (meaning a method of depreciating, as the depreciation allowance for that year, the amount calculated by multiplying the amount per fixed unit, calculated by dividing the amount obtained by deducting the residual value from the acquisition price of the Depreciable Asset for mining by the planned extraction quantity of the mining area to which that asset belongs within the period of the useful life of that asset (if the planned extraction years of the mining area to which that asset belongs are shorter than that useful life, the planned extraction years of that mining area), by the quantity extracted from that mining area in each year; the same applies hereinafter in this Division and Division 3);

Intangible Fixed Assets set forth in Article 6, item (viii) (excluding the mining rights set forth in the following item) and living organisms set forth in item (ix) of that Article: the former straight-line method;

Mining rights set forth in Article 6, item (viii), (a): the following methods;

The former straight-line method;

The former units-of-production method;

Foreign lease assets (meaning Depreciable Assets that are the subject of a lease transaction prescribed in Article 184-2, paragraph (1) (Calculation of Income in Each Class Pertaining to Lease Transactions) of the Order for Enforcement of the Income Tax Act prior to the amendment by the Cabinet Order Partially Amending the Order for Enforcement of the Income Tax Act (Cabinet Order No. 82 of 2007) (excluding those treated as transactions other than lease transactions of assets under that paragraph or paragraph (2) of that Article; hereinafter in this item referred to as "pre-amendment lease transactions") and that are leased to a Nonresident or a Foreign Corporation (excluding those used exclusively for business conducted by those persons in Japan); the same applies hereinafter in this paragraph and the following paragraph): the former overseas lease period straight-line method (meaning a method of depreciating, as the depreciation allowance for each year, the amount calculated by dividing the remainder obtained by deducting the estimated residual value from the acquisition price of the foreign lease asset pertaining to the pre-amendment lease transaction by the number of months of the period of the lease of that foreign lease asset specified in the contract pertaining to that pre-amendment lease transaction and multiplying the result by the number of months of the period of the lease of that foreign lease asset in that year; the same applies in Division 3).

The Depreciable Assets for mining prescribed in item (iii) of the preceding paragraph are Depreciable Assets directly necessary for the operation of mining whose value would be significantly reduced by the discontinuation of mining, and the estimated residual value prescribed in item (vi) of that paragraph means the amount equivalent to the amount of the consideration for the transfer that is expected if a foreign lease asset is transferred at the time of the end of its lease.

The number of months in paragraph (1), item (vi) is to be calculated according to the calendar, and if a fraction of less than one month arises, it is counted as one month.