①Where an individual who, following the enactment of laws and regulations, the conclusion of a treaty or other international agreement, or any other act specified by Cabinet Order as equivalent thereto (referred to in this paragraph as the "enactment of laws and regulations, etc.") with regard to the consolidation of businesses or other restrictions on business activities, is required to close or convert the business that the individual operates (referred to in this Article as an "operator closing its business, etc.") has received, as a result of closing or converting that business, subsidies of the State or a local government (including those equivalent thereto) or compensation contributed by remaining business operators, etc. (meaning persons operating a business of the same type as that business who continue to operate that business even after the enactment of laws and regulations, etc., and organizations formed by them), which are specified by Cabinet Order (referred to in this Article as "business closure or conversion subsidies, etc.") (including the case where the individual has received them through an organization to which the operator closing its business, etc. belongs or any other person in accordance with the purpose of the grant of the business closure or conversion subsidies, etc.; the same applies hereinafter in this Article), the amount of the part of those business closure or conversion subsidies, etc. corresponding to what is specified by Cabinet Order as expenses for compensating for the depreciation of machinery and other depreciable assets pertaining to that business held by the individual (referred to in this paragraph as a "grant compensating for depreciation") is not included in gross revenue in calculating the income in each class (meaning the income in each class prescribed in Article 2, paragraph (1), item (xxii) of the Income Tax Act; the same applies hereinafter in this Article) for the year that includes the day on which the grant compensating for depreciation was received.

②Where an individual who is an operator closing its business, etc. has received business closure or conversion subsidies, etc., if, by December 31 of the year that includes the day on which the individual received them, the individual has made an acquisition (excluding an acquisition through a lease transaction without transfer of ownership, and including construction and manufacture; the same applies hereinafter in this Article) or improvement (including demolition and removal; the same applies hereinafter in this Article) of assets specified by Cabinet Order with an amount equivalent to all or part of the amount of the part of those business closure or conversion subsidies, etc. corresponding to what is specified by Cabinet Order as expenses for subsidizing the closure or conversion of the business that the individual operates (referred to in this Article as a "business closure or conversion subsidy"), the amount equivalent to the amount spent on the acquisition or improvement of those assets, out of the amount of that business closure or conversion subsidy, is not included in gross revenue in calculating the income in each class for that year.

③The provisions of the preceding paragraph apply mutatis mutandis where the individual referred to in that paragraph expects to make an acquisition or improvement of the assets prescribed in that paragraph with an amount equivalent to all or part of the amount of the business closure or conversion subsidy, out of the business closure or conversion subsidies, etc. that the individual has received, within the period from January 1 of the year following the year that includes the day on which the individual received them to the day on which two years have elapsed after the day of receipt (or, where there are unavoidable circumstances specified by Cabinet Order, such as that the period required for the construction of a factory, etc. normally exceeds two years, the period from January 1 of that following year to the day specified by Cabinet Order), and has obtained the approval of the district director with jurisdiction over the place for tax payment pursuant to the provisions of Order of the Ministry of Finance. In this case, the phrase "the amount of that business closure or conversion subsidy" in that paragraph is deemed to be replaced with "the amount of that business closure or conversion subsidy (where the provisions of this paragraph are applied to income tax for the year that includes the day on which it was received, the amount after deducting the amount not included in gross revenue pursuant to the provisions of this paragraph)", and the phrase "the amount spent on the acquisition or improvement of those assets" is deemed to be replaced with "the estimated amount of the amount required for the acquisition or improvement of those assets approved by the district director".

④Where the business closure or conversion subsidies, etc. received by an individual who is an operator closing its business, etc. include the amount of a business closure or conversion subsidy, if there is an amount of the part of that business closure or conversion subsidy other than the amount not included in gross revenue pursuant to the provisions of paragraph (2) (including as applied mutatis mutandis pursuant to the preceding paragraph), the amount equivalent to that amount is revenue pertaining to occasional income for the year that includes the day on which it was received.

⑤The provisions of paragraph (1) and paragraph (2) (including as applied mutatis mutandis pursuant to paragraph (3); the same applies hereinafter up to the following paragraph) apply only if the final return for the year for which the individual seeks the application of those provisions contains a statement to the effect that the individual seeks the application of those provisions, and has attached to it a written statement concerning the calculation of the income in each class under those provisions and concerning the acquisition or improvement of the depreciable assets prescribed in paragraph (1) or the assets prescribed in paragraph (2), and any other documents specified by Order of the Ministry of Finance.

⑥Even where no final return has been filed or a final return without the statement or attachment referred to in the preceding paragraph has been filed, the district director may, when the district director finds that there was an unavoidable reason for the failure to file it or for the absence of the statement or attachment, apply the provisions of paragraph (1) or paragraph (2), only if a document containing that statement, and the written statement and the documents specified by Order of the Ministry of Finance referred to in that paragraph, are submitted.

⑦A person who has received the application of the provisions of paragraph (2) as applied mutatis mutandis pursuant to paragraph (3) must, if the person falls under any of the cases listed in the following items, file an amended return for income tax for the year that includes the day on which the business closure or conversion subsidies, etc. were received within four months from the day specified in the relevant item, and pay the amount of tax to be paid upon the filing of that return within that time limit:

⑧Where any of the cases listed in the items of the preceding paragraph has arisen, if no amended return is filed, the district director with jurisdiction over the place for tax payment makes a reassessment under the provisions of Article 24 or Article 26 of the Act on General Rules for National Taxes with regard to the amount of income, the amount of income tax, and other matters that should have been stated in that return.

⑨With regard to the application of the provisions of the Act on General Rules for National Taxes to an amended return under the provisions of paragraph (7) and to the reassessment referred to in the preceding paragraph, the following provisions apply:

⑩A person who has received the application of the provisions of paragraph (3) may, where the person has made an acquisition or improvement of the assets prescribed in paragraph (2) as applied mutatis mutandis pursuant to paragraph (3) within the period prescribed in that paragraph, if the amount spent on that acquisition or improvement has exceeded the estimated amount of the amount required for the acquisition or improvement approved by the district director as prescribed in paragraph (3), make a request for reassessment of income tax for the year that includes the day on which the business closure or conversion subsidies, etc. were received to the district director with jurisdiction over the place for tax payment within four months from the day on which the acquisition or improvement of those assets was made.

⑪Where an individual has received the application of the provisions of paragraph (2) (including as applied mutatis mutandis pursuant to paragraph (3); the same applies in the following paragraph), the provisions listed in the items of Article 19, paragraph (1) do not apply to the assets referred to in paragraph (2) to which the provisions of that paragraph have been applied.

⑫The calculation of the depreciation allowance prescribed in Article 49, paragraph (1) of the Income Tax Act to be made by an individual who has received the application of the provisions of paragraph (1) or paragraph (2) for the depreciable assets prescribed in paragraph (1) or the assets referred to in paragraph (2) to which the provisions of that paragraph have been applied, the calculation of the amount of capital gains where that individual has transferred those assets, and other necessary matters concerning the application of the provisions of that Act pertaining to business closure or conversion subsidies, etc. are specified by Cabinet Order.