①The methods of valuation specified by Cabinet Order prescribed in Article 47, paragraph (1) (Calculation of Costs of Inventory Sold and Valuation Methods) of the Act that may be selected for calculating, pursuant to that paragraph, the assessed value of Inventory held on December 31 of that year (where the Resident referred to in that paragraph dies or becomes Absent From Japan during the year, the time of that death or the start of that Absence From Japan; the same applies hereinafter in this Subsection) are the following methods (where approval from the district director for filing a Blue Return for the income tax for that year has not been obtained, the method listed in item (i)).

②The cost method using the acquisition price calculated by the specific identification method listed in item (i), (a) of the preceding paragraph (including the lower of cost or market method listed in item (ii) of that paragraph that is based on the price assessed by that cost method) may not be selected, notwithstanding the provisions of that paragraph, for Inventory that is normally acquired in large quantities through a single transaction and whose price is determined according to specifications.

①A Resident who has obtained the approval of the competent district director with jurisdiction over the place for tax payment to calculate the assessed value of Inventory that the Resident holds by a method of valuation other than the method of valuation prescribed in paragraph (1) of the preceding Article, in place of that method of valuation, may select the approved method of valuation for calculating the assessed value of those assets for the year that includes the day on which the approval was obtained and each subsequent year.

②A Resident who intends to obtain the approval referred to in the preceding paragraph must submit to the competent district director with jurisdiction over the place for tax payment a written application stating the particulars of the method of valuation that the Resident intends to adopt, the reason for intending to adopt that method, the type of business and category of assets prescribed in paragraph (1) of the following Article for which the Resident intends to calculate the assessed value by that method, and other matters specified by Ministry of Finance Order.

③When the written application referred to in the preceding paragraph is submitted, the district director is, without delay, to examine it and either approve the method of valuation and the type of business and category of assets prescribed in paragraph (1) of the following Article pertaining to the application or, where the district director finds that calculation of the amount of business income of that Resident for each year would be difficult to carry out properly by the method of valuation pertaining to the application, reject the application.

④After granting the approval referred to in paragraph (1), where the district director finds that special circumstances have arisen that make it inappropriate to calculate the assessed value of the Inventory pertaining to the approval by the method of valuation pertaining to the approval, the district director may rescind the approval.

⑤When taking the disposition referred to in the preceding two paragraphs, the district director is to notify the Resident subject to the disposition to that effect in writing.

⑥Where the disposition referred to in paragraph (4) has been made, the effect of that disposition arises with respect to the calculation of the assessed value of the Inventory pertaining to that disposition when calculating the amount of business income for the year that includes the day on which the disposition was made and each subsequent year.

⑦A Resident who has received the disposition referred to in paragraph (4) must, by the Filing Deadline for the income tax for the year that includes the day on which the Resident received the disposition, notify the competent district director with jurisdiction over the place for tax payment in writing, for the Inventory pertaining to that disposition, for each type of business and category of assets prescribed in paragraph (1) of the following Article, of the method of valuation to be used among the methods of valuation prescribed in paragraph (1) of the preceding Article.

①The method of valuing Inventory prescribed in Article 99, paragraph (1) (Methods of Valuing Inventory) must be selected for each type of business carried on by a Resident and for each category of Inventory, namely goods or products (excluding by-products and work scrap), semi-finished products, work in process (including partially completed construction work), principal raw materials and auxiliary raw materials, and other Inventory.

②A Resident must, by the Filing Deadline for the income tax for the year that includes the day listed in each of the following items according to the category of persons listed in that item, notify the competent district director with jurisdiction over the place for tax payment in writing, for Inventory, for each type of business and category of assets prescribed in the preceding paragraph, of the method of valuation to be used among the methods of valuation prescribed in Article 99, paragraph (1).

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

②A Resident who intends to obtain the approval referred to in the preceding paragraph must submit to the competent district director with jurisdiction over the place for tax payment, by March 15 of the year in which the Resident intends to adopt the new method of valuation, a written application stating that fact, the reason for the intended change, and other matters specified by Ministry of Finance Order.

③Where the written application referred to in the preceding paragraph is submitted, the district director may reject the application if a considerable period has not elapsed since the Resident who submitted the written application adopted the method of valuation currently in use, or if the district director finds that calculation of the amount of business income of that Resident for each year would be difficult to carry out properly by the method of valuation to which the Resident intends to change.

④Where the written application referred to in paragraph (2) is submitted, and the district director makes a disposition of approval or rejection of the application, the district director is to notify the Resident who made the application to that effect in writing.

⑤Where the written application referred to in paragraph (2) has been submitted, if no disposition of approval or rejection has been made on the application by December 31 of that year, the approval is deemed to have been granted on that day.

①The method specified by Cabinet Order in the case where a method of valuation prescribed in Article 47, paragraph (1) (Calculation of Costs of Inventory Sold and Valuation Methods) of the Act has not been selected or Inventory has not been valued by the method selected is the cost method using the acquisition price calculated by the last purchase cost method listed in Article 99, paragraph (1), item (i), (e) (Methods of Valuing Inventory).

②Where a Resident has not valued Inventory by the method of valuation selected for it (including the method of valuation prescribed in the preceding paragraph that a Resident who has not notified a method of valuation is required to use), if the district director finds that the method of valuation the Resident used falls under one of the methods of valuation prescribed in Article 99, paragraph (1) and that the amount of business income of the Resident for each year can be properly calculated even by the method of valuation used, the district director may make a Reassessment or determination on the basis of the amount of business income for each year calculated by the method of valuation used.