Article 64-7Aggregation of Losses

一in the case where the first day or the last day of any of the business years that started within ten years before the first day of the business year of a group tax sharing subsidiary corporation to which the provisions of Article 57, paragraph (1) apply (hereinafter referred to as the "applicable business year" in this Article) differs from the first day or the last day of the business years of the group tax sharing parent corporation pertaining to the group tax sharing subsidiary corporation that started within ten years before the first day of the business year of the group tax sharing parent corporation ending on the day of the end of the applicable business year (hereinafter referred to as the "start date" up to item (iii)) (in the case where the group tax sharing parent corporation is a corporation established on or after the day ten years before the start date, counting from the start date, the period specified by Cabinet Order as the period equivalent to those business years; hereinafter referred to as the "parent corporation's business years within the past ten years, etc." in this item), the periods of the parent corporation's business years within the past ten years, etc. are to be the business years of the group tax sharing subsidiary corporation that started within ten years before the first day of the applicable business year;

二the net operating loss that arose in each business year that started within ten years before the first day of the applicable business year of a group tax sharing corporation (in the case where the group tax sharing corporation is a group tax sharing subsidiary corporation, limited to one ending on the day of the end of the business year of the group tax sharing parent corporation pertaining to the group tax sharing corporation; the same applies hereinafter in this Article) (in the case where the group tax sharing corporation is a group tax sharing subsidiary corporation to which the provisions of the preceding item apply, each business year that started within ten years before the start date in the case where the provisions of that item are applied; hereinafter referred to as a "business year within the ten years" in this Article) is to be the sum of the amounts listed in (a) and (b) (in the case where there is an amount listed in (c), the amount obtained by adding that amount, and in the case where there is an amount listed in (d), the amount obtained by deducting that amount):

イthe specified net operating loss, out of the net operating loss that arose in the corresponding business year of the group tax sharing corporation pertaining to the business year within the ten years (meaning a business year of the group tax sharing corporation (in the case where the provisions of the preceding item apply, a business year in the case where those provisions are not applied; the same applies in (a)) whose first day falls within the period of the business year within the ten years (in the case where the day following the last day of the business year within the ten years is the start date, including a business year that started after that last day); the same applies hereinafter in this Article) (including an amount deemed to be the net operating loss of that business year under Article 57, paragraph (2), and excluding the following; the same applies hereinafter in this Article):

（１）the sum of the amounts included in deductible expenses when calculating the amount of income for each business year prior to the applicable business year under Article 57, paragraph (1) (in the case where the provisions of this Article were applied in each such business year, the amounts deemed under item (iv) to be the amounts included in deductible expenses when calculating the amount of income for each such business year);

（２）the amount deemed not to exist under Article 57, paragraphs (4) through (6), paragraph (8) or paragraph (9) or Article 58, paragraph (1) (Special Provisions on Losses for Business Years for Which No Blue Return Was Filed);

（３）the amount to which the provisions of Article 57, paragraph (1) are deemed not to apply under Article 57-2, paragraph (1) (Non-application of a Carryover of Losses for a Corporation Showing a Loss. That Is Controlled by Specified Shareholders);

（４）the amount used as the basis of the calculation of the amount to be refunded under Article 80 (Refund by Carryback of Loss).

ロthe amount other than the specified net operating loss, out of the net operating loss that arose in the corresponding business year of the group tax sharing corporation pertaining to the business year within the ten years;

ハin the case where the amount calculated by multiplying the amount listed in (1) by the ratio of the amount listed in (2) to the sum of the amounts listed in (2) and (3) (referred to as the "aggregate income amount" in (c) and (d)) (referred to as the "allocated non-specified deficit" in (d)) exceeds the amount listed in (b), the amount of the excess (in the case where the aggregate income amount is zero, zero):

（１）the sum of the amounts other than the specified net operating loss, out of the net operating losses that arose in the business years of the group tax sharing corporation and other group tax sharing corporations (limited to those that have a group tax sharing full controlling interest with the group tax sharing corporation as of the day of the end of the applicable business year of the group tax sharing corporation and whose business year ends on that day; the same applies hereinafter in this paragraph, paragraph (4) and paragraph (5)) (in the case where the provisions of the preceding item apply, business years in the case where those provisions are not applied; the same applies in (1)) whose first day falls within the period of the business year within the ten years (in the case where the day following the last day of the business year within the ten years is the start date, including a business year that started after that last day);

（２）the amount obtained by deducting the sum of the following amounts from the limit on inclusion in deductible expenses for the applicable business year of the group tax sharing corporation (meaning the limit on inclusion in deductible expenses prescribed in the proviso to Article 57, paragraph (1) (including as applied by replacing terms pursuant to paragraph (11) of that Article); the same applies hereinafter in this Article):

（ｉ）the sum of the amounts, out of the amounts deemed under this item to be the net operating losses that arose in each business year within the ten years prior to the business year within the ten years, that are to be included in deductible expenses when calculating the amount of income for the applicable business year under Article 57, paragraph (1);

（ｉｉ）the amount, out of the specified net operating loss that arose in the corresponding business year of the group tax sharing corporation pertaining to the business year within the ten years, that is to be included in deductible expenses when calculating the amount of income for the applicable business year under Article 57, paragraph (1);

（３）the sum of the amounts obtained by deducting the sum of the following amounts from the limit on inclusion in deductible expenses for the business years of the other group tax sharing corporations ending on the day of the end of the applicable business year of the group tax sharing corporation:

（ｉ）the sum of the amounts, out of the amounts deemed under this item to be the net operating losses that arose in each business year of the other group tax sharing corporation that started before the first day of the business year within the ten years, that are to be included in deductible expenses when calculating the amount of income for the business year of the other group tax sharing corporation ending on the day of the end of the applicable business year under Article 57, paragraph (1);

（ｉｉ）the amount, out of the specified net operating loss that arose in the business year of the other group tax sharing corporation whose first day falls within the period of the business year within the ten years (in the case where the day following the last day of the business year within the ten years is the start date, including a business year that started after that last day), that is to be included in deductible expenses when calculating the amount of income for the business year of the other group tax sharing corporation ending on the day of the end of the applicable business year under Article 57, paragraph (1).

ニin the case where the allocated non-specified deficit is less than the amount listed in (b), the amount of the shortfall (in the case where the aggregate income amount is zero, zero).

三the amount of the excess prescribed in the proviso to Article 57, paragraph (1), out of the amount deemed under the preceding item to be the net operating loss that arose in the business year within the ten years of a group tax sharing corporation, is to be the sum of the following amounts:

イin the case where the specified net operating loss that arose in the corresponding business year of the group tax sharing corporation pertaining to the business year within the ten years exceeds the amount calculated by multiplying the amount, out of that specified net operating loss, up to the income before loss deduction for the business year within the ten years (meaning the amount obtained by deducting the amount listed in (c), (2), (i) of the preceding item from the amount of income for the applicable business year calculated without applying the provisions of the main clause of Article 57, paragraph (1) and without applying the provisions of Article 59, paragraphs (3) and (4) (Inclusion in Deductible Expenses of the Net Operating Loss Where Corporate Reorganization Caused a Release from Obligation) and Article 62-5, paragraph (5) (Transfer of Assets by Distribution in Kind); the same applies in (2)), by the ratio of the amount listed in (1) to the sum of the amounts listed in (2) and (3) (in the case where that sum is zero, zero, and in the case where that ratio exceeds one, one) (hereinafter referred to as the "specified limit on inclusion in deductible expenses" in this Article), the amount of the excess:

（１）the amount obtained by deducting the sum of the amounts listed in (c), (2), (i) and (c), (3), (i) of the preceding item from the sum of the limit on inclusion in deductible expenses for the applicable business year of the group tax sharing corporation and the limits on inclusion in deductible expenses for the business years of the other group tax sharing corporations ending on the day of the end of the applicable business year;

（２）the amount, out of the specified net operating loss that arose in the corresponding business year of the group tax sharing corporation pertaining to the business year within the ten years, up to the income before loss deduction for the business year within the ten years;

（３）the sum of the amounts, out of the specified net operating losses that arose in the business years of the other group tax sharing corporations whose first day falls within the period of the business year within the ten years (in the case where the day following the last day of the business year within the ten years is the start date, including a business year that started after that last day), up to the other income before loss deduction for the business year within the ten years (meaning the amount obtained by deducting the amount listed in (c), (3), (i) of the preceding item from the amount of income for the business year of the other group tax sharing corporation ending on the day of the end of the applicable business year calculated without applying the provisions of the main clause of Article 57, paragraph (1) and without applying the provisions of Article 59, paragraphs (3) and (4) and Article 62-5, paragraph (5); the same applies in paragraph (4) and paragraph (9), item (iv)).

ロin the case where the amount deemed under the preceding item to be the net operating loss that arose in the business year within the ten years of the group tax sharing corporation (excluding the amount listed in (a) of that item; referred to as the "non-specified deficit" in (b)) exceeds the amount calculated by multiplying the non-specified deficit by the ratio of the amount listed in (1) to the amount listed in (2) (in the case where the amount listed in (2) is zero, zero, and in the case where that ratio exceeds one, one; referred to as the "non-specified deductible ratio" in (b) of the following item and paragraph (5)) (referred to as the "non-specified deduction limit" in paragraph (5) and paragraph (9), item (vii)), the amount of the excess:

（１）the amount obtained by deducting the sum of the amounts listed in (c), (2), (i) and (ii) and (c), (3), (i) and (ii) of the preceding item from the sum of the limit on inclusion in deductible expenses for the applicable business year of the group tax sharing corporation and the limits on inclusion in deductible expenses for the business years of the other group tax sharing corporations ending on the day of the end of the applicable business year;

（２）the amount listed in (c), (1) of the preceding item pertaining to the business year within the ten years.

四with regard to the application of the provisions of Article 57, paragraph (1) in business years after the applicable business year, the amount, out of the net operating loss that arose in each business year (in the case where the provisions of item (i) apply, a business year in the case where those provisions are not applied; the same applies hereinafter in this item), included in deductible expenses when calculating the amount of income for the applicable business year under that paragraph (referred to as the "net operating loss included in deductible expenses" in paragraph (11)) is to be the sum of the following amounts:

イthe amount, out of the specified net operating loss that arose in each relevant business year, up to the specified limit on inclusion in deductible expenses pertaining to the business year within the ten years pertaining to each relevant business year;

ロthe amount calculated by multiplying the net operating loss (excluding the specified net operating loss) that arose in each relevant business year by the non-specified deductible ratio pertaining to that net operating loss.

一the net operating loss that arose in each business year that started within ten years before the first day of the first group tax sharing business year (meaning the business year that first ends on or after the day on which the group tax sharing approval became effective (in the case of a business year of a group tax sharing subsidiary corporation, limited to one ending on the day of the end of the business year of the group tax sharing parent corporation pertaining to the group tax sharing subsidiary corporation); the same applies in the following item and the following paragraph) of a group tax sharing corporation (limited to a corporation listed in any of the items of Article 64-11, paragraph (1) (Gains or Losses on the Fair Valuation of Assets Accompanying the Commencement of the Group Tax Sharing System) or any of the items of Article 64-12, paragraph (1) (Gains or Losses on the Fair Valuation of Assets Accompanying Participation in the Group Tax Sharing System));

二the amount deemed to be the net operating loss of the relevant group tax sharing corporation under Article 57, paragraph (2) due to a qualified merger in which a group tax sharing corporation is the acquiring corporation (limited to one in which the acquired corporation is a corporation that does not have a group tax sharing full controlling interest with the group tax sharing corporation (including another group tax sharing corporation whose first group tax sharing business year has not ended)) having been effected, or due to the residual assets of another domestic corporation that has a full controlling interest with a group tax sharing corporation (limited to a full controlling interest held by the group tax sharing corporation or the mutual relationship prescribed in Article 2, item (xii)-7-6 (Definitions)) and whose issued shares or capital contributions are wholly or partly held by the group tax sharing corporation (limited to one that does not have a group tax sharing full controlling interest with the group tax sharing corporation (including another group tax sharing corporation whose first group tax sharing business year has not ended)) having been determined;

三the amount deemed not to exist under the preceding Article, out of the net operating loss that arose in a business year in which the corporation fell under the category of a group tax sharing corporation.

一the sum of the deduction amounts for losses allocated in (meaning the amount calculated by multiplying the amount listed in paragraph (1), item (ii), (c) by the non-specified deductible ratio) pertaining to each business year within the ten years in the case where the initially reported limit on inclusion in deductible expenses for the applicable business year is deemed to be the limit on inclusion in deductible expenses for the applicable business year, and the initially reported net operating loss and the initially reported specified net operating loss for each corresponding business year pertaining to the applicable business year and the initially reported specified limit on inclusion in deductible expenses and the initially reported non-specified limit on inclusion in deductible expenses pertaining to each business year within the ten years pertaining to the applicable business year are deemed to be, respectively, the net operating loss and the specified net operating loss that arose in each such corresponding business year and the specified limit on inclusion in deductible expenses and the non-specified deduction limit pertaining to each such business year within the ten years;

二the amount to be included in deductible expenses when calculating the amount of income for the applicable business year under Article 57, paragraph (1) in the case where the amount listed in (a) is deemed not to exist, the amount listed in (b) is treated as the limit on inclusion in deductible expenses for the applicable business year of the group tax sharing corporation, and the provisions of paragraph (1), items (ii) and (iii) are not applied:

イout of the net operating loss that arose in each corresponding business year pertaining to the applicable business year, the deduction amount for losses allocated out (meaning the amount calculated by multiplying the amount listed in paragraph (1), item (ii), (d) by the non-specified deductible ratio) pertaining to each such corresponding business year in the case where the initially reported limit on inclusion in deductible expenses for the applicable business year is deemed to be the limit on inclusion in deductible expenses for the applicable business year, and the initially reported net operating loss and the initially reported specified net operating loss for each corresponding business year pertaining to the applicable business year and the initially reported specified limit on inclusion in deductible expenses and the initially reported non-specified limit on inclusion in deductible expenses pertaining to each business year within the ten years pertaining to the applicable business year are deemed to be, respectively, the net operating loss and the specified net operating loss that arose in each such corresponding business year and the specified limit on inclusion in deductible expenses and the non-specified deduction limit pertaining to each such business year within the ten years;

ロthe amount obtained by deducting the amount listed in the preceding item from the limit on inclusion in deductible expenses for the applicable business year of the group tax sharing corporation (in the case where there is an amount listed in (1), the amount obtained by adding that amount, and in the case where there is an amount listed in (2), the amount obtained by deducting that amount):

（１）the initial deduction excess (meaning, in the case where the amount listed in (i) exceeds the amount listed in (ii), the amount of the excess):

（ｉ）the amount entered in the documents attached to the return as the amount to be included in deductible expenses when calculating the amount of income for the applicable business year under Article 57, paragraph (1);

（ｉｉ）the initially reported limit on inclusion in deductible expenses for the applicable business year of the group tax sharing corporation.

（２）the amount calculated by multiplying the initial deduction shortfall (meaning, in the case where the amount listed in (1), (i) is less than the amount listed in (1), (ii), the amount of the shortfall; the same applies in (2)) by the deduction shortfall ratio (meaning the ratio of the sum of the other initial deduction excesses (meaning, in the case where the amount listed in (i) of another group tax sharing corporation exceeds the amount listed in (ii) of that other group tax sharing corporation, the amount of the excess) to the sum of the initial deduction shortfall and the other initial deduction shortfalls (meaning, in the case where the amount listed in (i) of another group tax sharing corporation is less than the amount listed in (ii) of that other group tax sharing corporation, the amount of the shortfall) (in the case where that sum is zero, zero)):

（ｉ）the amount to be included in deductible expenses when calculating the amount of income for the other business year under Article 57, paragraph (1) (in the case where there is an amount deemed under the preceding paragraph to be the amount to be included in deductible expenses, that deemed amount);

（ｉｉ）the limit on inclusion in deductible expenses for the other business year (in the case where there is an amount deemed under the preceding paragraph to be the limit on inclusion in deductible expenses, that deemed amount).

一the amount, out of the amount of income for the applicable business year calculated without applying the provisions of the main clause of Article 57, paragraph (1) and without applying the provisions of Article 59, paragraphs (3) and (4) and Article 62-5, paragraph (5) (referred to as the "income after inclusion in gross profit" in the following item), up to the amount included in gross profits when calculating the amount of income for the applicable business year under the preceding paragraph;

二the amount equivalent to 50 percent of the amount obtained by deducting the amount included in gross profits when calculating the amount of income for the applicable business year under the preceding paragraph from the income after inclusion in gross profit.

一the case where the provisions of Article 64-5, paragraph (6) (Aggregation of Profits and Losses) apply;

二the case where the provisions of Article 64-5, paragraph (8) apply.

一the limit on inclusion in deductible expenses for the other business year;

二the net operating loss and the specified net operating loss that arose in each business year that started within ten years before the first day of the other business year;

三the amount, out of the amount listed in the preceding item, to be included in deductible expenses when calculating the amount of income for the other business year under Article 57, paragraph (1);

四the other income before loss deduction pertaining to each business year that started within ten years before the first day of the other business year;

五the limit on inclusion in deductible expenses for the applicable business year;

六the net operating loss and the specified net operating loss that arose in each corresponding business year pertaining to the applicable business year;

七the specified limit on inclusion in deductible expenses and the non-specified deduction limit pertaining to each business year within the ten years pertaining to the applicable business year.