①The amount calculated as provided by Cabinet Order prescribed in Article 52, paragraph (2) (Bad Debt Reserves) of the Act is the amount calculated by multiplying the sum of the book values of the collectively assessed loans (meaning the collectively assessed loans prescribed in that paragraph; the same applies hereinafter in this Article) held by a Resident referred to in that paragraph as of December 31 of that year (or, if the Resident dies in the middle of the year, at the time of death) (for a collectively assessed loan of which all or part is not substantially regarded as a claim because of an amount the Resident has received from the debtor pertaining to that collectively assessed loan, the remainder after deducting the amount equivalent to the portion not regarded as a claim; the same applies in the following paragraph) by the ratio specified in each of the following items according to which of the businesses set forth in those items the principal one of the businesses the Resident carries on that are to generate business income falls under.

②For the calculation of the book value of the collectively assessed loans under the preceding paragraph, a Resident referred to in that paragraph who has continuously carried on business that is to generate business income since January 1, 2015 may, notwithstanding the provisions of that paragraph, treat the amount calculated by multiplying the amount of the collectively assessed loans as of December 31 of that year (or, if the Resident dies in the middle of the year, at the time of death) by the proportion that the sum of the amounts of the portion not regarded as a claim prescribed in that paragraph as of December 31 of each of the years 2015 and 2016 bears to the sum of the amounts of the collectively assessed loans as of December 31 of each of those years (where that proportion has a fraction below the third decimal place, it is rounded down) as the amount equivalent to the amount of the portion not regarded as a claim prescribed in that paragraph.

The case specified by Cabinet Order prescribed in Article 52, paragraph (2) (Bad Debt Reserves) of the Act is the case where, upon the death of a Resident referred to in that paragraph, none of the Resident's heirs is a person who has succeeded to the Resident's business prescribed in that paragraph and has obtained the district director's approval to submit a Blue Return for the income tax for the year that includes the day of death (including a person who has submitted the written application under Article 144 (Application for Approval to File a Blue Return) of the Act for that income tax).

Where a Resident referred to in Article 52, paragraph (1) or (2) (Bad Debt Reserves) of the Act dies and there is an amount of the reserve account for bad debts that has been included in necessary expenses under those provisions in calculating the amount of business income for the year that includes the day of the Resident's death, that amount of the reserve account for bad debts is to be included in gross revenue in calculating the amount of business income for that year of the heir specified in each of the following items according to the categories of the amount of the reserve account for bad debts set forth in those items.

The retirement allowance rules specified by Cabinet Order prescribed in Article 54, paragraph (1) (Reserves for Severance Packages) of the Act are the following rules:

①The amount calculated as provided by Cabinet Order prescribed in Article 54, paragraph (1) (Reserves for Severance Packages) of the Act is the lesser of the following amounts:

②In the case referred to in the preceding paragraph, with respect to a Resident who has not established the rules set forth in item (i) of the preceding Article as of December 31 of that year (excluding a Resident who has submitted to the district director, attached to the documents submitted under Article 158, paragraph (1) or (2) (Submission of Documents Pertaining to Retirement Allowance Rules) (where documents have been submitted two or more times under the provisions of paragraph (2) of that Article, the most recently submitted documents), a document stating the opinion prescribed in Article 90, paragraph (1) (Procedures for Preparing Rules of Employment) of the Labor Standards Act or Article 98 (Procedures for Preparing Rules of Employment) of the Mariners Act and a document stating the details of the fact of having made the rules known to workers under Article 106, paragraph (1) (Duty to Make Laws and Regulations Known) of the Labor Standards Act or having posted or kept available under Article 113, paragraph (1) (Posting, etc. of Rules of Employment, etc.) of the Mariners Act, pertaining to the rules set forth in item (ii) of the preceding Article, or a document specified by Ministry of Finance Order as equivalent to those documents, pertaining to the rules set forth in item (iii) of that Article), where the amount set forth in item (i) of the preceding paragraph exceeds the amount equivalent to 6 percent of the total amount of salaries, wages, bonuses and payments of the nature of those that are included in necessary expenses in calculating the amount of business income for that year with respect to the employees in service on that day (excluding persons employed on a daily basis, persons employed temporarily for a fixed period and other persons not covered by the payment of severance packages), the amount set forth in that item is the amount equivalent to 6 percent of the total amount of those payments.

①A Resident who has an amount of the severance package reserves account prescribed in Article 54, paragraph (2) (Reserves for Severance Packages) of the Act (hereinafter in this Article referred to as the "amount of the retirement allowance reserve account") must, when falling under a case set forth in one of the following items, reverse the amount of the retirement allowance reserve account specified in the relevant item, except where the case falls under the provisions of the following paragraph:

②Where the approval to submit a Blue Return has been rescinded for a Resident who has an amount of the retirement allowance reserve account, or the Resident has submitted a written notice to the effect that the Resident will cease filing under a Blue Return, the Resident must reverse, in each of the year that includes the day of the event that was the cause of the rescission or the day on which the written notice was submitted (where the day on which the written notice was submitted is in the year following the year in which the Resident ceased, December 31 of the year in which the Resident ceased), the following year and the year after that, the amount equivalent to one-third of the amount of the retirement allowance reserve account on those days; provided, however, that where the Resident has transferred or discontinued the whole of the business that is to generate business income, or has died, during the year that includes the day of the event that was the cause of the rescission or the day on which the written notice was submitted, or during the following year, the Resident must reverse the full amount of that amount of the retirement allowance reserve account in the year that includes the day of that transfer or discontinuance or the day of death.