Article 174Acquisition Cost Related to Capital Gains in the Case of the Establishment of a Land Leasehold Right, etc.

①Where Article 33, paragraph (1) (Capital Gains) of the Act applies to the establishment (including an act of causing another person to use the land pertaining to a land leasehold right; the same applies hereinafter in this Article) of a land leasehold right or servitude prescribed in Article 79, paragraph (1) (Acts Deemed to Be Transfers of Assets) (hereinafter in this Article referred to as "land leasehold right, etc."), the acquisition cost to be deducted in the calculation of the amount of capital gains pertaining to that establishment is the amount calculated by multiplying the sum of the amount required for the acquisition of the land on which that land leasehold right, etc. was established and the amount of improvement expenses by the proportion that the amount listed in item (i) accounts for in the amount listed in item (ii).

②Where a land leasehold right, etc. has been further established in favor of another person on land on which a land leasehold right, etc. has been established, if there is an amount treated as acquisition cost under the preceding paragraph for the earlier establishment of the land leasehold right, etc., then for the application of that paragraph to the establishment of the land leasehold right, etc. in favor of that other person, the sum of the amount required for the acquisition and the amount of improvement expenses prescribed in that paragraph pertaining to that land is the amount obtained by deducting the amount treated as acquisition cost from the amount equivalent to that sum.

③Where paragraph (1) applies, if no land leasehold right, etc. is currently established on land on which a land leasehold right, etc. was previously established, and there is acquisition cost that was deducted under that paragraph in the calculation of the amount of capital gains pertaining to the establishment of that earlier land leasehold right, etc., then, except where consideration was paid for the extinguishment of that earlier land leasehold right, etc. (including the right pertaining to the use referred to in that paragraph; the same applies hereinafter in this paragraph), the acquisition cost prescribed in paragraph (1) is the amount obtained by deducting the amount equivalent to the deducted acquisition cost from the amount calculated under that paragraph for the land leasehold right, etc. referred to in that paragraph.

④Where paragraph (1) applies, if the land pertaining to the establishment of that land leasehold right, etc. has been continuously owned since on or before December 31, 1952, the sum of the amount required for the acquisition and the amount of improvement expenses prescribed in that paragraph pertaining to that land is the amount equivalent to the sum of the amount calculated for that land under Article 172, paragraphs (1) and (2) (Acquisition Cost of Assets Acquired on or before December 31, 1952) and the amount of improvement expenses expended on or after January 1, 1953.