Article 140Claim to Be Issued a Refund Based on Carryback of Net Loss

①If a Resident filing a Blue Return incurs a Net Loss in the year, the Resident may file a claim with the competent district tax office director for the locality in which the Resident pays taxes, seeking to be issued an income tax refund in an amount equivalent to what is arrived at when the amount set forth in item (ii) is deducted from the amount set forth in item (i), at the time of filing the return:

②In a case as referred to in the preceding paragraph, if the amount of income taxes equivalent to what is arrived at when the deduction prescribed in that paragraph is made exceeds the amount of income taxes (less any Punitive Tax) on the previous year's taxable gross income, taxable retirement income, and taxable timber income, the limit of the amount for which the Resident may file a claim to be issued a refund as referred to in that paragraph is the latter amount of income taxes.

③Cabinet Order makes provisions for when the amount set forth in paragraph (1), item (ii) is calculated, specifying which, among the taxable gross income, taxable retirement income, and taxable timber income referred to in the item, is the first amount from which the Net Loss is deducted; and specifying which, out of either the average taxable amount prescribed in Article 90, paragraph (3) or the amount arrived at when the average taxable amount is deducted from taxable gross income, is the first amount from which the Net Loss is deducted in the event that Article 90 (Averaging Taxation on Fluctuating Income and Ad Hoc Income) was applied in the previous year.

④The provisions of paragraph (1) apply only if the Resident referred to in that paragraph filed a Blue Return for income taxes in the previous year and files a Blue Return for the relevant year by the deadline for filing it (or after the deadline for filing the return, if the district tax office director finds there to be compelling circumstances for allowing this).

⑤If a Resident undergoes a full business transfer or closure or is affected by any other facts equivalent to this which are specified by Cabinet Order after having incurred a Net Loss in the year before that in which the day of occurrence of the relevant facts falls (this Net Loss excludes any amount deducted in the year in which that day falls pursuant to the provisions of Article 70, paragraph (1) (Deduction for Carryover of Net Loss), and excludes any amount used as the basis for calculating the amount to be refunded pursuant to Article 142, paragraph (2) (Issuance of Refunds Based on Carryback of Net Loss)), the Resident may file a claim with the competent district tax office director for the locality in which the Resident pays taxes, seeking to be issued an income tax refund in an amount equivalent to what is calculated for the Net Loss pursuant to Cabinet Order and in accordance with the provisions of paragraphs (1) through (3), by the income tax Filing Deadline for the year in which that day falls, but only if the person has filed a Blue Return for income taxes for the year before that in which that day falls and for the year before that.