Income Tax Act

Inventory: the commodities, finished products, half-finished products, products in progress, and raw materials of a business undertaking that is meant to generate business income, and any other asset (excluding Securities, cryptoassets (meaning cryptoassets as prescribed in Article 48-22, paragraph (1) ((49) of the Financial Instruments and Exchange Act; the same applies in Article 33, paragraph (3) (Capital Gains), Article 48-2 (Calculation of the Cost of Transfer of Cryptoassets and Method of Valuation) and Article 69, paragraph (2) (Aggregation of Profits and Losses)), and forested land) that Cabinet Order prescribes should be considered Inventory;

Net Loss:any part of the loss prescribed in Article 69, paragraph (1) (Aggregation of Profits and Losses) that is not fully offset when the provisions of that Article are applied;

the total of a Resident's interest income, dividend income, real property income, business income, salary income, capital gains (but only the part constituting income set forth in Article 33, paragraph (3), item (i) or (iii) (Capital Gains)), and miscellaneous income (or the amount arrived at through the application of Article 69 (Aggregation of Profits and Losses), if those provisions apply);

Capital gains is the amount arrived at by first treating each of the following items separately as regards the income set forth therein and calculating the sum total of the acquisition costs of assets generating the income set forth in the item plus the cost to transfer those assets, subtracting this sum from gross revenues constituting the income set forth in that item in the year, adding together the net balances from those calculations (or, if gross revenues constituting the income set forth in either one of the following items alone is less than the sum total of the acquisition costs of the assets generating that income and the cost to transfer those assets, the sum total of the amounts for the income set forth in the other items after successively offsetting the net balancebalances calculated for the income set forth in thethose other itemitems by an amount equivalent to the negative balance, in the order prescribed by Cabinet Order; hereinafter such an amount is referred to as "net gain" in this Article), then applying the special capital gains deduction against the net gain:

income arising from a transfer of assets (other than cryptoassets; the same applies in the following item) (other than a transfer falling under the provisions of the preceding paragraph; the same applies in the following itemthat item and item (iii)) that was made within five years after the date of the acquisition thereof (other than income prescribed by Cabinet Order);

income arising from a transfer of cryptoassets.

The special capital gain deduction provided for in the preceding paragraph is 500,000 yen (or the net gain, if this is less than 500,000 yen).the amount that each of the following items prescribes for the category of case set forth in the item:

a case other than that set forth in the following item: 500,000 yen;

if the sum total of the part of the net gain that comes from income set forth in item (i) of the preceding paragraph and the part of the net gain that comes from income set forth in item (ii) of that paragraph is less than 500,000 yen: that sum total.

When a special capital gain deduction as prescribed in paragraph (3) is applied against a net gain pursuant to the provisions of that paragraph, the deduction is first applied against the part of the net gain that comes from income set forth in item (i) of that paragraph, and if any amount remains that is not fully deducted, it is applied against the part of the net gain that comes from income set forth in item (ii) of that paragraph.

In the calculation of the amount that, pursuant to the provisions of Article 37, paragraph (1) (Necessary Expenses), is included, in association with the cryptoassets of a Resident, in the necessary expenses that are used to calculate the Resident's business income or miscellaneous income, or the amount that, pursuant to the provisions of Article 38, paragraph (1) (Acquisition Costs Deducted to Calculate Capital Gains), is included, in association with the cryptoassets of a Resident, in the acquisition costs that are used to calculate the Resident's capital gains, the value of cryptoassets held by the Resident on December 31 of the relevant year which is used as the basis for that calculation is the amount of money assessed based on the valuation method that the Resident has selected for cryptoassets (or based on the valuation method prescribed by Cabinet Order, if the Resident does not select a valuation method or if the value is not assessed based on the selected valuation method).

In the case referred to in the preceding paragraph, if part of the loss prescribed in that paragraph is a loss that arises when the amount of income from assets as prescribed in Article 62, paragraph (1) (Loss of Assets Not Ordinarily Necessary in Everyday Life, Due to Disaster) or from cryptoassets that generate capital gains is calculated (hereinafter such an amount of income is referred to as "income from assets not ordinarily necessary in everyday life" in this paragraph), the part of that loss that Cabinet Order prescribes is to be offset against other income from assets not ordinarily necessary in everyday life pursuant to Cabinet Order, and any part of that loss other than what Cabinet Order prescribes as well as any amount that is not fully offset is deemed to have never existed.