If, in any year, a Resident is issued a national or local government subsidy or benefit or anything that Cabinet Order prescribes as being equivalent thereto (hereinafter referred to as a "government subsidy or its equivalent" in this Article and the following Article) which is meant to be allocated to acquiring or improving Fixed Assets (including forested land; hereinafter the same applies in this Article and the following Article) (but only if the final decision that the Resident need not return the government subsidy or its equivalent is reached by December 31 of that year (or by the time of the Resident's death or Absence From Japan, if the Resident dies or the Resident's Absence From Japan occurs partway through the year; hereinafter the same applies in this paragraph and paragraph (1) of the following Article)), and the Resident acquires or improves Fixed Assets in line with the purpose for which it is issued by December 31 of that year, an amount equal to the amount of the government subsidy or its equivalent issued (or, if the Fixed Assets are Depreciable Assets acquired or improved in a year before that year, the amount calculated pursuant to Cabinet Order based on the amount of the government subsidy or its equivalent) is not included in the gross revenue that is used to calculate that Resident's Income in Each Class.

If, in any year, a Resident is issued Fixed Assets in lieu of a government subsidy or its equivalent, an amount equal to the value of those Fixed Assets is not included in the gross revenue that is used to calculate that Resident's Income in Each Class.

The provisions of the preceding two paragraphs apply only if the Tax Return indicates recourse to the application of those provisions, indicates the amount that is not being included in gross revenue pursuant to those provisions, and gives the information prescribed by Ministry of Finance Order.

Even if no Tax Return is filed or if a Tax Return is filed that is not filled out as referred to in the preceding paragraph, the district tax office director may apply the provisions of paragraph (1) or paragraph (2) on finding there to be unavoidable circumstances for the Resident's failure to file the Tax Return or fill it out in that manner.

Cabinet Order provides for the necessary particulars concerning the calculation of the depreciation allowance provided for in Article 49, paragraph (1) (Calculating Depreciation Allowances for Depreciable Assets; Depreciation Methods) for Fixed Assets that have been subject to the provisions of paragraph (1) or for Fixed Assets as prescribed in paragraph (2) that are acquired by a Resident subject to the provisions of paragraph (1) or paragraph (2); and provides for the necessary particulars concerning the calculation of business income, timber income, capital gains, or miscellaneous income in the event that such a Resident transfers those Fixed Assets.