Act on Special Measures Concerning Taxation

With regard to the application of the provisions of Article 33, paragraph (3) of the Income Tax Act to capital gains in the case where an individual who has acquired property by inheritance or bequest (including a gift that takes effect upon the death of the donor; the same applies hereinafter in this Article) (including an acquisition that is deemed to be an acquisition of property by inheritance or bequest pursuant to the provisions of the Inheritance Tax Act or Article 70-5, 70-6-9, 70-7-3, or 70-7-7; the same applies in paragraph (6)) and who has an amount of inheritance tax under the provisions of that Act with respect to the inheritance or bequest has transferred (including the lending of real property, etc. giving rise to capital gains prescribed in Article 31, paragraph (1); the same applies hereinafter in this paragraph and in paragraphs (4) and (8)) an asset included in the basis for calculating the taxable value pertaining to the amount of inheritance tax (where the provisions of Article 19 or Articles 21-14 through 21-18 of that Act apply, the amount deemed to be the taxable value under those provisions) during the period from the day following the day of commencement of the succession until the day on which three years have elapsed from the day following the due date for filing (referred to as the "due date for the return for inheritance tax" in paragraph (4), item (i)) of the return under Article 27, paragraph (1) or Article 29, paragraph (1) of that Act pertaining to the inheritance (for an asset acquired due to the occurrence of an event prescribed in Article 4, paragraph (1) of that Act after the filing of that return, the return under Article 31, paragraph (2) of that Act pertaining to the acquisition; referred to as the "return for inheritance tax" in that item), the acquisition cost prescribed in that paragraph is to be the amount obtained by adding, to the amount equivalent to the acquisition cost, the amount calculated pursuant to the provisions of Cabinet Order as the portion of the amount of inheritance tax that corresponds to the transferred asset.

The provisions of the preceding paragraph apply only if, for the year for which the person seeks the application of the provisions of that paragraph, the tax return or amended return form (limited to one filed pursuant to the provisions of Article 151-4, paragraph (1) of the Income Tax Act; the same applies in the following paragraph) contains a statement to the effect that the person seeks the application of the provisions of the preceding paragraph, and has attached to it a written statement concerning the calculation of the amount of capital gains under the provisions of that paragraph and other documents specified by Order of the Ministry of Finance.

Even where no tax return or amended return form has been filed, or where a tax return or amended return form without the statement or attachment referred to in the preceding paragraph has been filed, the district director may, if the district director finds that there were unavoidable circumstances for the absence of the filing or of the statement or attachment, apply the provisions of paragraph (1), but only if a document containing the statement and the documents specified by Order of the Ministry of Finance referred to in that paragraph are submitted.

Where, as a result of applying the provisions of paragraph (1) to the transfer of an asset included in the basis for calculating the taxable value prescribed in that paragraph by a person listed in any of the following items, the income tax of the person who made the transfer for the year that includes the day of the transfer comes to fall under any of the cases listed in the items of Article 153-2, paragraph (1) of the Income Tax Act, the person may make a request for reassessment to the district director by the day specified in each of the following items:

a person who has filed a return for inheritance tax (including the filing of a return that is deemed to be a return filed by the due date prescribed in Article 2, paragraph (3), item (i) pursuant to the provisions of Article 69-3, paragraph (5), item (i) (including the cases where it is applied mutatis mutandis pursuant to Article 70, paragraph (9)); hereinafter referred to as the "filing of an inheritance tax return by the due date" in this item) during the period from the day following the due date for filing a tax return for the year that includes the day on which the asset was transferred until the due date for the return for inheritance tax (excluding a person who had already filed a return for inheritance tax by the due date for filing a tax return and a person who filed a final return after the filing of an inheritance tax return by the due date): The day on which two months have elapsed from the day following the day on which the person filed the inheritance tax return by the due date;

a person for whom, on or after the day on which the asset was transferred, due to the application of the first sentence of Article 60-3, paragraph (6) of the Income Tax Act with regard to the income tax of the decedent (including a testator of a universal legacy) pertaining to the inheritance or bequest for the year that includes the day of commencement of the succession, an amended return form under Article 151-3, paragraph (1) of that Act has been filed, or a reassessment under Article 24 or 26 of the Act on General Rules for National Taxes (including a decision or determination on an appeal, or a judgment in an action, regarding the disposition on the request; hereinafter referred to as a "reassessment" in this paragraph and paragraph (9)) based on a request for reassessment under Article 153-3, paragraph (1) of the Income Tax Act has been made: The day on which four months have elapsed from the day following the day on which the amended return form was filed or the reassessment was made;

a person for whom, on or after the day on which the asset was transferred, due to the occurrence of an event such as the division of an estate prescribed in Article 151-6, paragraph (1) of the Income Tax Act with regard to the income tax of the decedent (including a testator of a universal legacy) pertaining to the inheritance or bequest for the year that includes the day of commencement of the succession, an amended return form under that paragraph has been filed, or a reassessment based on a request for reassessment under Article 153-5 of that Act has been made: The day on which four months have elapsed from the day following the day on which the amended return form was filed or the reassessment was made.

The provisions of paragraphs (2) and (3) apply mutatis mutandis where a request for reassessment is made pursuant to the provisions of the preceding paragraph. In this case, in paragraph (2), the phrase "the tax return or amended return form (limited to one filed pursuant to the provisions of Article 151-4, paragraph (1) of the Income Tax Act; the same applies in the following paragraph) contains a statement to the effect that the person seeks the application of the provisions of the preceding paragraph" is deemed to be replaced with "the written request for reassessment contains a statement to the effect that the person seeks the application of the provisions of that paragraph", and in paragraph (3), the phrase "no tax return or amended return form" is deemed to be replaced with "no written request for reassessment by the day specified in each item of the following paragraph according to the category of persons listed in those items", the phrase "a tax return or amended return form without the statement or attachment" is deemed to be replaced with "a written request for reassessment without the statement or attachment", and the phrase "the filing" is deemed to be replaced with "the filing by that day".

The amount of inheritance tax under the provisions of the Inheritance Tax Act prescribed in paragraph (1) is, where among the persons who have acquired property by inheritance or bequest from the same decedent (meaning a decedent prescribed in Article 70-6, paragraph (1)) there is a person who receives the application of the provisions of paragraph (1) of that Article, to be the amount of inheritance tax to be paid prescribed in paragraph (2) of that Article, and, where there is an amount to be deducted under the provisions of Article 20, Article 21-15, paragraph (3), or Article 21-16, paragraph (4) of that Act, to be the amount obtained by adding that amount to the amount of inheritance tax under the provisions of that Act or to the amount of inheritance tax to be paid.

The assets included in the basis for calculating the taxable value prescribed in paragraph (1) are not to include an asset to which the provisions of Article 59, paragraph (1) or Article 60-3, paragraph (1) of the Income Tax Act applied with respect to the transfer of the asset by inheritance or bequest (excluding an asset to which the proviso to paragraph (4) of that Article applies or to which the main clause of that paragraph has ceased to apply), and, where the provisions of Article 33-3 applied to an asset included in the basis for calculating the taxable value, are to include an asset acquired through a replotting disposition under paragraph (1) or (9) of that Article or a rights conversion under paragraph (2), (4), (6), or (8) of that Article pertaining to that asset.

In applying the provisions of paragraph (1), the amount to be added to the acquisition cost prescribed in that paragraph pursuant to the provisions of that paragraph is to be calculated for each transferred asset.

Where the amount of inheritance tax referred to in paragraph (1) has decreased as a result of a request for reassessment under Article 32, paragraph (1) of the Inheritance Tax Act made by an individual who received the application of the provisions of paragraph (1), with regard to the amount of income tax to be paid as a result of the filing of an amended return form or a reassessment due to the decrease in the amount of inheritance tax, the period from the day following the statutory payment due date prescribed in Article 2, item (viii) of the Act on General Rules for National Taxes pertaining to the income tax until the day on which the amended return form was filed or the day on which the written notice of reassessment under Article 28, paragraph (1) of that Act pertaining to the reassessment was issued is not included in the period that forms the basis for calculating delinquent tax under Article 60, paragraph (2) of that Act.

In addition to what is provided for in paragraphs (2) and (3) and paragraph (5) through the preceding paragraph, the calculation of the amount of inheritance tax under the provisions of the Inheritance Tax Act prescribed in paragraph (1) in the case where the provisions of Article 19 of that Act apply, and other necessary matters concerning the application of the provisions of paragraph (1) are specified by Cabinet Order.