①When a domestic corporation has transferred, as a result of a merger or company split, its assets or liabilities to an acquiring corporation or succeeding corporation in a company split, the amount of income of the domestic corporation for each business year is calculated by deeming that the assets and liabilities transferred to the acquiring corporation or succeeding corporation have been transferred at their value as of the merger or company split. In this case, it is deemed that the domestic corporation (excluding a domestic corporation holding no stated capital or capital contributions), which has transferred the assets or liabilities as a result of the merger or the company split (limited to a company split by split-off in which all of the assets as a consideration for a split prescribed in Article 2, item (xii)-9, (a) (Definitions) (hereinafter referred to as "assets as a consideration for a split" in this paragraph) are delivered directly to the shareholders, etc. of the splitting corporation, and a company split by split-off that falls under a company split without consideration prescribed in (b) of that item and is specified by Cabinet Order as a company split by split-off in which the delivery of shares (including capital contributions; hereinafter the same applies in this paragraph and paragraph (3) of the following Article) of the succeeding corporation in a company split to the shareholders, etc. of the splitting corporation is found to have been omitted; hereinafter referred to as a "specified company split by split-off" in this paragraph), has acquired new shares, etc. (meaning shares and other assets of the acquiring corporation that it has delivered as a result of the merger (such shares and other assets include shares and other assets of the acquiring corporation that are deemed to have been received under the provisions of Article 24, paragraph (2) (The Amount Deemed to Be Dividends) in the case prescribed in that paragraph and shares of the acquiring corporation that are deemed to have been received under the provisions of paragraph (3) of that Article in the case prescribed in that paragraph)) from the acquiring corporation, or the assets as a consideration for a split pertaining to the specified company split by split-off (including shares of the succeeding corporation in a company split that are deemed to have been received under the provisions of Article 24, paragraph (3) in the case prescribed in that paragraph) from the succeeding corporation in a company split pertaining to the specified company split by split-off, at their fair value and then immediately has delivered the new shares, etc. or the assets as a consideration for a split to its shareholders, etc.

②With regard to the assets and liabilities transferred to an acquiring corporation as a result of a merger, the amount of gain on transfer (meaning the excess amount when the value as of the merger exceeds the amount of cost for the transfer) or amount of loss on transfer (meaning the excess amount when the amount of cost for the transfer exceeds the value as of the merger) on the transfer as a result of the transfer is included in gross profits or deductible expenses, when calculating the amount of income for the final business year pertaining to the merger (meaning the business year containing the day preceding the date of an acquired corporation's merger; the same applies in paragraph (1) of the following Article).

③The calculation of the amount of cost prescribed in the preceding paragraph and other necessary matters concerning the application of the provisions of the preceding two paragraphs are specified by Cabinet Order.