Supplementary Provisions, Article 12Transitional Measures Concerning Special Repair Reserves

①With regard to the application of Article 55 (Reserves for Special Repairs) of the Income Tax Act before amendment by the provisions of Article 2 of the Amending Act (hereinafter referred to as the "Former Act"), which is to remain in force pursuant to Article 15, paragraph (2) (Transitional Measures Concerning Reserves for Special Repairs) of the Supplementary Provisions of the Amending Act, the provisions of Articles 160 through 163 (Transfer Limit to the Special Repair Reserve Account, etc.) of the Former Order, Article 4 (Transitional Measures Concerning Reserves for Special Repairs) of the Supplementary Provisions of the Cabinet Order Partially Amending the Order for Enforcement of the Income Tax Act (Cabinet Order No. 84 of 1996) before amendment by the provisions of Article 19 (Partial Amendment of the Cabinet Order Partially Amending the Order for Enforcement of the Income Tax Act) of the Supplementary Provisions, and Article 3 (Transitional Measures Concerning Reserves for Special Repairs) of the Supplementary Provisions of the Cabinet Order Partially Amending the Order for Enforcement of the Income Tax Act (Cabinet Order No. 103 of 1997; hereinafter referred to as the "1997 Amendment Order" in the following paragraph) before amendment by the provisions of Article 20 (Partial Amendment of the Cabinet Order Partially Amending the Order for Enforcement of the Income Tax Act) of the Supplementary Provisions remain in force. In this case, the phrase "大蔵省令" (Ministry of Finance Order, under its former name) in Article 160, items (iii) and (iv) and Article 161, paragraph (1), item (i), (d) and paragraph (3) of the Former Order is deemed to be replaced with "財務省令" (Ministry of Finance Order, under its current name); provided, however, that for a Fixed Asset prescribed in Article 55, paragraph (1) of the Former Act for which an amount of the special repair reserve account that has passed the two years prescribed in Article 15, paragraph (3) of the Supplementary Provisions of the Amending Act has arisen, the amount calculated as prescribed by the Cabinet Order prescribed in that paragraph is deemed not to exist.

②The date specified by Cabinet Order prescribed in Article 15, paragraph (3) of the Supplementary Provisions of the Amending Act is to be, according to which of the assets listed in the following items the asset prescribed in that paragraph falls under, the date specified in the respective item.

③In the case where, as of December 31 of each year on or after 1999, there is, among the amount of the special repair reserve account relating to an asset carried forward from the preceding year, an amount for which two years have elapsed from the day following December 31 of the year that includes the date prescribed in the preceding paragraph for that asset (or, where that day is before December 31, 1999, the day following December 31, 1999) (hereinafter in this paragraph referred to as the "reserve amount past the scheduled special repair date"), for an individual who has the amount of the special repair reserve account relating to an asset prescribed in Article 15, paragraph (2) of the Supplementary Provisions of the Amending Act (limited to an amount included in necessary expenses in calculating the amount of real property income or the amount of business income for each year pursuant to Article 55, paragraph (1) of the Former Act as it remains in force pursuant to Article 15, paragraph (2) of the Supplementary Provisions of the Amending Act, and excluding an amount that has already become subject to reversal pursuant to this paragraph or Article 55, paragraph (2) of the Former Act; the same applies hereinafter in this Article), an amount equivalent to the amount calculated by multiplying the amount of the special repair reserve account relating to that asset as of December 31 of the year that includes the day on which those two years elapsed by 12 (or, where that individual has died, the number of months in the period from January 1 of the year that includes the date of death to the date of death), and dividing the product by the number of months prescribed in the preceding paragraph for that asset (or, where the amount so calculated exceeds the amount of the special repair reserve account relating to that asset as of December 31 of the year that includes the day on which those two years elapsed, that amount of the special repair reserve account) must be reversed with respect to that reserve amount past the scheduled special repair date.

④Where an individual who has the amount of the special repair reserve account prescribed in Article 55, paragraph (6) (Treatment of the Amount of the Special Repair Reserve Account in the Case of Death) of the Former Act, which is to remain in force pursuant to Article 15, paragraph (2) of the Supplementary Provisions of the Amending Act, has died, with regard to the application of the preceding paragraph to the heir of that individual for the year that includes the date of death, the amount of the special repair reserve account carried forward from the preceding year prescribed in that paragraph is to include the amount of the special repair reserve account deemed to be held by the heir of that individual pursuant to Article 163, paragraph (2) of the Former Order, which is to remain in force pursuant to paragraph (1). In this case, with regard to the amount of the special repair reserve account deemed to be held by that heir, the phrase "by 12" in the preceding paragraph is deemed to be replaced with "by the number of months in the period from the date of death to December 31 of the year that includes that date".

⑤The number of months in paragraph (3) (including where applied with replaced readings pursuant to the preceding paragraph) is to be calculated according to the calendar, and where a fraction of less than one month arises, it is deemed to be one month.