①If, among the amounts expended with respect to Depreciable Assets held by a Resident (excluding those falling under the following Article; the same applies hereinafter in this Article), there is an amount that was not included in necessary expenses, pursuant to Article 181 (Capital Expenditure), 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 the year in which the date of expenditure falls, a Depreciable Asset of the same type and useful life as the Depreciable Asset held is deemed to have been newly acquired, with that amount as the acquisition price under paragraph (1) of the preceding Article.

②In the case prescribed in the preceding paragraph, if the Resident prescribed in that paragraph has adopted the depreciation method prescribed in Article 120, paragraph (1) (Depreciation Methods for Depreciable Assets) as the depreciation method to be used for the Depreciable Assets held, the amount expended referred to in the preceding paragraph may, notwithstanding the preceding paragraph, be added to the acquisition price of that Depreciable Asset under the provisions of the preceding Article.

③In the case prescribed in paragraph (1), if the Depreciable Asset held by the Resident prescribed in that paragraph is a leased asset (meaning a leased asset prescribed in Article 120-2, paragraph (2), item (iv) (Depreciation Methods for Depreciable Assets); the same applies hereinafter in this paragraph), the Depreciable Asset deemed to have been newly acquired under the provisions of paragraph (1) is deemed to fall under a leased asset. In this case, Article 120-2 is applied by treating the lease term prescribed in paragraph (2), item (vii) of that Article for the Depreciable Asset deemed to have been acquired as the period from the day on which the amount expended referred to in paragraph (1) was expended to the last day of the lease term prescribed in that item for the Depreciable Asset held by that Resident.

④In the case prescribed in paragraph (1), if the amount expended prescribed in that paragraph is expended in connection with a renewal under Article 57, paragraph (3) (Duration of Fishing Port Water Surface Facility Operation Rights) of the Act on Development, etc. of Fishing Ports and Grounds (Act No. 137 of 1950), the phrase "type and useful life" in paragraph (1) is deemed to be replaced with "type".

⑤In the case where there is an amount that was not included in necessary expenses as prescribed in paragraph (1) with respect to the income tax of a Resident for the year preceding that year, if the Resident has adopted the declining-balance method as the depreciation method to be used for the Depreciable Assets held by the Resident prescribed in that paragraph (excluding assets acquired on or before March 31, 2012; hereinafter in this paragraph referred to as "former Depreciable Assets") and the Depreciable Assets deemed to have been newly acquired under the provisions of paragraph (1) (hereinafter in this Article referred to as "additional Depreciable Assets"), then notwithstanding that paragraph, it may be deemed that one Depreciable Asset has been newly acquired, on January 1 of that year, whose acquisition price under paragraph (1) of the preceding Article is the sum of the acquisition price of the former Depreciable Assets on that day under the preceding Article (if there is an 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 up to the year preceding that year, the amount obtained by deducting that amount; hereinafter in this Article referred to as "acquisition price, etc.") and the acquisition price, etc. of the additional Depreciable Assets.

⑥In the case where there is an amount that was not included in necessary expenses as prescribed in paragraph (1) with respect to the income tax of a Resident for the year preceding that year, if the Resident has adopted the declining-balance method as the depreciation method to be used for the additional Depreciable Assets pertaining to that amount and does not receive the application of the preceding paragraph, then notwithstanding paragraph (1) and the preceding paragraph, it may be deemed that one Depreciable Asset has been newly acquired, on January 1 of that year, whose acquisition price under paragraph (1) of the preceding Article is the sum of the acquisition price, etc. on that day of those additional Depreciable Assets not subject to that application that are of the same type and useful life.

①Where a house or other asset that depreciates through use or the passage of time, that has been continuously owned since on or before December 31, 1952, and that has not been used for business that is to generate real property income, business income, timber income or miscellaneous income, is put to use for that business, the acquisition price of that asset prescribed in Article 126, paragraph (1) (Acquisition Price of Depreciable Assets) is the sum of the amount calculated as provided by Cabinet Order prescribed in Article 61, paragraph (3) (Acquisition Costs of Assets Acquired Prior to December 31, 1952) of the Act with respect to that asset and the amount of equipment expenses and improvement expenses paid for that asset during the period from January 1, 1953 to the day on which it was put to use for that business.

②The provisions of paragraphs (1), (2), (5) and (6) of the preceding Article apply mutatis mutandis to the case where, among the amounts paid for an asset prescribed in the preceding paragraph after it has been put to use for the business set forth in that paragraph, there is an amount that has not been included in the necessary expenses prescribed in paragraph (1) of that Article.

The useful life of a Depreciable Asset prescribed in Article 120, paragraph (1), items (i) and (iii) and Article 120-2, paragraph (1), items (i) and (iii) (Depreciation Methods for Depreciable Assets), the depreciation rate corresponding to the useful life prescribed in Article 120, paragraph (1), item (i) and Article 120-2, paragraph (1), item (i), the revised depreciation rate corresponding to the useful life prescribed in that item, the guarantee rate corresponding to the useful life prescribed in paragraph (2), item (i) of that Article, and the residual value prescribed in Article 120, paragraph (1), items (i) and (iii) are as provided by Ministry of Finance Order.