Order for Enforcement of the Income Tax Act

The amount of Net Loss specified by Cabinet Order as prescribed in Article 70, paragraph (2) (Deduction for Carryover of Net Loss Pertaining to Losses on Disaster-Damaged Business Assets, etc.) of the Act is, out of the amount of Net Loss arising in each of the three years up to and including the year preceding that year as prescribed in that paragraph, the amount up to the amount of the losses listed in the items of that paragraph (excluding any amount already deducted in or before the year preceding that year pursuant to that paragraph).

The expenditures specified by Cabinet Order as prescribed in Article 70, paragraph (3) (Amount of Loss on Disaster-Damaged Business Assets) of the Act are expenditures for the following expenses:

expenses for demolishing or removing the assets prescribed in Article 70, paragraph (3) of the Act (hereinafter in this Article referred to as "business assets") because they have been lost or damaged, or have declined in value, due to a Disaster, and other incidental expenses;

the following expenses, and other expenses similar to these, that are paid, in the case where business assets have been damaged or have declined in value due to a Disaster, or in any other case where it has become difficult to put those business assets to use for business due to a Disaster, by the day preceding the day on which one year has elapsed from the day following the day on which the Disaster ended (or, in the case of a large-scale Disaster or where there are other unavoidable circumstances, the day on which three years have elapsed):

expenses for removing earth and sand and other obstacles caused by the Disaster;

repair expenses for restoring those business assets to their original condition;

expenses for preventing damage to those business assets or a decline in their value;

expenses for taking urgently necessary measures to prevent the spread or occurrence of damage to those business assets, in the case where damage has actually been caused to business assets by a Disaster, or where it is expected that damage is imminently likely to be caused to them by a Disaster.

The amounts specified by Cabinet Order as prescribed in the items of Article 70-2, paragraph (1) (Special Provisions on Deduction for Carryover of Net Loss Related to a Specified Extraordinary Disaster) of the Act are the amounts specified in the following items in accordance with the categories of assets listed in those items.

Fixed Assets: the amount equivalent to the amount that would be treated as the acquisition cost of the asset if Article 38, paragraph (1) or (2) (Acquisition Costs Deducted to Calculate Capital Gains) of the Act were applied by deeming there to have been a transfer of assets with respect to the asset on the day on which the loss due to the specified extraordinary Disaster prescribed in Article 70-2, paragraph (1) of the Act (referred to as the "specified extraordinary Disaster" in the following item) occurred;

Deferred Assets: the amount obtained by deducting from the amount of the Deferred Asset the cumulative amount of the amounts included in necessary expenses, as the depreciation allowance for it under Article 50 (Calculating Depreciation Allowances for Deferred Assets; Depreciation Methods) of the Act, in calculating the amount of real property income, the amount of business income or the amount of timber income for each year up to the year preceding the year that includes the day on which the loss due to the specified extraordinary Disaster occurred.

The amount of Net Loss specified by Cabinet Order as prescribed in Article 70-2, paragraph (4), item (i) of the Act is, out of the amount of Net Loss arising to the person in that year, the amount up to the total amount of specified Disaster losses on disaster-damaged business assets prescribed in that item that arose in that year.

The unavoidable expenditures specified by Cabinet Order as prescribed in Article 70-2, paragraph (4), item (ii) of the Act are expenditures for the expenses listed in the items of the preceding Article.

The assets specified by Cabinet Order as prescribed in Article 70-2, paragraph (4), item (iii) of the Act are the portion not yet included in necessary expenses of Deferred Assets pertaining to a business that generates real property income, business income or timber income.

The amount of Net Loss specified by Cabinet Order as prescribed in Article 70-2, paragraph (4), item (v) of the Act is, out of the amount of Net Loss arising to the person in the year of the specified extraordinary Disaster prescribed in paragraph (1) of that Article, the amount up to the amount of the losses listed in the items of Article 70, paragraph (2) (Deduction for Carryover of Net Loss) of the Act that arose in that year of the specified extraordinary Disaster.

The deduction of the amount of Casualty Loss under Article 71, paragraph (1) (Deduction for Carryover of Casualty Loss) of the Act is as follows:

where the amounts of Casualty Loss to be deducted arose in two or more years within the three years up to and including the preceding year (where Article 71-2, paragraph (1) (Special Provisions on Deduction for Carryover of Casualty Loss Related to a Specified Extraordinary Disaster) of the Act applies, within the five years up to and including the preceding year; the same applies in the following item), they are deducted in order, starting from the amount of Casualty Loss that arose in the oldest of those years;

where there is an amount equivalent to the portion of an amount of Casualty Loss that arose in one of the three years up to and including the preceding year that was not deducted in or before the preceding year, it is deducted in order from the amount of gross income, the amount of timber income or the amount of retirement income for that year.

Where there is an amount of loss arising in the calculation of the amounts of Income in Each Class for that year, or where a deduction is made under Article 70 (Deduction for Carryover of Net Loss) of the Act, the deduction under Article 69 (Aggregation of Profits and Losses) and Article 70 of the Act is made first, and then the deduction under Article 71, paragraph (1) of the Act is made. In this case, where the amounts of Net Loss and Casualty Loss to be deducted arose in two or more years within the three years up to and including the preceding year (where Article 70-2, paragraphs (1) through (3) (Special Provisions on Deduction for Carryover of Net Loss Related to a Specified Extraordinary Disaster) or Article 71-2, paragraph (1) of the Act applies, within the five years up to and including the preceding year), they are deducted in order, starting from the amount of Net Loss or Casualty Loss that arose in the oldest of those years.

Where the preceding two paragraphs apply, if the year in which another amount of Casualty Loss held by the person (meaning an amount of Casualty Loss other than the specified Casualty Loss prescribed in Article 71-2, paragraph (1) of the Act (hereinafter in this paragraph and Article 206, paragraph (5) (Scope of Casualty Losses Subject to Casualty Loss Deduction, etc.) referred to as "specified Casualty Loss"); the same applies hereinafter in this paragraph and Article 206, paragraph (5)) or amount of other net loss arose is the year in which the Net Loss subject to the special provisions or specified Casualty Loss held by the person arose or the following year, the deduction under the preceding two paragraphs is made by treating that other amount of Casualty Loss or that amount of other net loss as having arisen in a year earlier than that Net Loss subject to the special provisions or that specified Casualty Loss.

The provisions of the following Article apply mutatis mutandis to the relatives specified by Cabinet Order as prescribed in Article 71-2, paragraph (2) (Special Provisions on Deduction for Carryover of Casualty Loss Related to a Specified Extraordinary Disaster) of the Act. In this case, the phrase "of a Resident" in paragraph (1) of the following Article is deemed to be replaced with "who shares the same livelihood with a Resident", the phrase "is 580,000 yen or less." in that paragraph is deemed to be replaced with "is 580,000 yen or less; in this case, whether a person falls under a spouse or other relative who shares the same livelihood with a Resident is determined according to the circumstances on the day on which the specified extraordinary Disaster under Article 71-2, paragraph (2) (Special Provisions on Deduction for Carryover of Casualty Loss Related to a Specified Extraordinary Disaster) of the Act occurred.", and the phrase "Article 72, paragraph (1)" in paragraph (2) of that Article is deemed to be replaced with "Article 71-2, paragraph (1)".

The unavoidable expenditures specified by Cabinet Order as prescribed in Article 71-2, paragraph (2) of the Act are the expenditures listed in Article 206, paragraph (1), items (i) through (iii) (Scope of Casualty Losses Subject to Casualty Loss Deduction, etc.).