Article 62-5Transfer of Assets by Distribution in Kind

②With regard to the assets transferred to a corporation receiving a distribution in kind or any other person as a result of a distribution or delivery of all residual assets, the amount of gain on transfer (meaning the excess amount when the value as of the time of determination of residual assets 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 time of determination of residual assets) 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 business year containing the date of determination of residual assets.

③When a domestic corporation has transferred its assets to a corporation receiving a distribution in kind or any other shareholders, etc. as a result of a qualified in-kind distribution or qualified share distribution, the amount of income of the domestic corporation for each business year is calculated by deeming that the domestic corporation has transferred the assets to the corporation receiving a distribution in kind or the other shareholders, etc. at their book value as of immediately prior to the qualified in-kind distribution or qualified share distribution (or, in the case where the qualified in-kind distribution is a distribution of all residual assets, their book value as of the time of determination of residual assets).

④The amount of proceeds arising from a domestic corporation's receipt of the transfer of assets as a result of a qualified in-kind distribution is excluded from gross profits, when calculating the amount of income of the domestic corporation for each business year.

⑤The amount of enterprise tax under the provisions of the Local Tax Act and the amount of special corporate business tax under the provisions of the Act on the Special Corporate Business Tax and the Special Corporate Business Transfer Tax (Act No. 4 of 2019) for the business year containing the date of determination of residual assets of a domestic corporation are included in deductible expenses, when calculating the amount of income of the domestic corporation for that business year.

⑥The acquisition cost of the assets of a corporation receiving a distribution in kind and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.