Statutory definition

“For short-term trading commodities and similar assets held by a domestic corporation at fiscal year-end (‘year-end’ in this and the following paragraph), the valuation amount shall be determined using the method specified for the category in each following item (for item (ii), the corporation's selected method, or, if none was selected, the method in subitem (b)).” (Corporation Tax Act, Article 61(2))

Corporate assets generally produce gains or losses upon sale. Appreciation alone does not change book value. This provision departs from that principle by requiring recalculation of the value of assets held at fiscal year-end.

It covers “short-term trading commodities and similar assets.” Paragraph (1) includes crypto assets under Article 2(14) in that term. The purpose limitation on the first group of assets—acquisition to profit from short-term price movements—does not apply to crypto assets. The definition itself is discussed in How does the tax law define "cryptoassets"?.

This paragraph alone does not settle the result. The valuation method depends on the applicable item, and only assets valued at market lead to gains or losses under paragraph (3).

Overview

Are Only Market Crypto Assets Subject to Market Valuation?

“Short-term trading commodities and similar assets (for crypto assets, limited to market crypto assets (those prescribed by Cabinet Order as having an active market; the same applies in the following item), excluding the following).” (Corporation Tax Act, Article 61(2)(i))

The parentheses narrow the scope in two stages. First,“limited to”; second,“excluding the following.”It is.

Market crypto assets at the first stage are those prescribed by Cabinet Order as having an active market. Article 118-7(1) requires all of the following.

• “The published trading prices or similar values materially influence determination of the asset's trading prices or exchange ratios.” (Item (i))
• “Transactions occur in sufficient quantity and frequency to permit continuous publication of the values in the preceding item.” (Item (ii))
• Prices are published by a person other than the corporation, or the transactions are not primarily its own-account transactions (item (iii)).

Item (iii) excludes situations where the corporation generates both the prices and the trading itself.

Two Exclusions

Specified transfer-restricted assets under (a) are restricted assets for which “procedures for appropriate publication of those conditions have been performed.” Merely imposing restrictions is insufficient.

Specified self-issued assets under (b) are assets “issued by the domestic corporation and continuously held since issuance,” with transfer restrictions or other conditions continuously applying from that time.

However, paragraph (2)(ii) permits selection of market value or cost for specified transfer-restricted market crypto assets other than self-issued assets; without an election, cost applies. Item (iii) applies cost to other assets.

How Is Market Valuation Calculated?

Item (i)'s market value method uses the amount calculated as prescribed by Cabinet Order as the year-end value. Article 118-8 specifies quantity multiplied by the final published price or equivalent for each type. For crypto assets, that price is determined under paragraph (1)(iii) or (iv).

“...the final trading price for the crypto asset published on the fiscal year-end date (if no final price is published that day, the final price on the closest preceding date on which such a price was published).” (Order for Enforcement of the Corporation Tax Act, Article 118-8(1)(iii))

The reference isthe final trading price on the fiscal year-end date. If none is published that day, the closest preceding publication date is used, covering situations such as a holiday year-end.

The provision also defines the publisher: a person continuously publishing prices that materially affect actual pricing. If the underlying trading is primarily the corporation's own-account activity, the corporation itself is excluded.

Do Valuation Gains and Losses Affect That Year's Profit or Loss?

“Where a domestic corporation holds short-term trading commodities and similar assets at year-end (limited to those valued then using the market value method, the ‘market valuation amount’ in this paragraph; the same applies in this and the following paragraph), and, for crypto assets, holds them for its own account...” (Corporation Tax Act, Article 61(3))

“...shall, notwithstanding Article 25(1) (Asset Valuation Gains) or Article 33(1) (Asset Valuation Losses), be included in gross income or deductible expenses in calculating income for the fiscal year containing that year-end.” (Same paragraph)

Between these passages are the definitions: a valuation gain is market valuation exceeding year-end book value, and a valuation loss is the reverse. Each is “the amount of the excess.”The fiscal year's income changes even without a sale.

Articles 25(1) and 33(1) establish general rules for asset valuation gains and losses. Article 61(3) expressly says “notwithstanding” those provisions. Treatment follows this paragraph rather than reverting to the general rules.

The entry condition is valuation under the market value method. Crypto assets using cost never enter this paragraph.

What Does Reversal in the Following Year Mean?

“An amount equivalent to the amount included by a domestic corporation in gross income or deductible expenses for a fiscal year under Article 61(3) of the Act (Gains and Losses on Transfers and Market Valuation of Short-Term Trading Commodities, etc.) shall be included in deductible expenses or gross income in calculating income for the following fiscal year.” (Order for Enforcement of the Corporation Tax Act, Article 118-10(1))

The amount returns in the opposite direction the following year.

The same article also addresses book value.

“...the amount obtained by subtracting from the fiscal year-end book value after application of that paragraph an amount equivalent to the deduction under paragraph (1), or adding an amount equivalent to the gross income inclusion under that paragraph.” (Order for Enforcement of the Corporation Tax Act, Article 118-10(4))

Opening book value for the following year is the post-valuation book value minus the next year's deduction or plus its gross income inclusion. This restores the value before market valuation.

Year-end market valuation affects one fiscal year's income and is canceled the next: a two-way entry. Appreciation does not accumulate permanently in book value. The outward and return entries, however, fall in different fiscal years.

What Does “Held for Its Own Account” Mean?

“For crypto assets, limited to holdings for its own account.” (Corporation Tax Act, Article 61(3))

The requirement is not physical custody or registered title, butholding for its own account. The same phrase appears in paragraph (4), limiting transfers to own-account holdings, and paragraph (6), concerning domestic corporations holding crypto assets for their own account.

This is not mere emphasis. Article 118-6(6)(ii) also excludes from “acquisition” for book-value calculations acquisitions resulting in holding the crypto assets for someone else's account.

The provisions assume crypto assets may be held for others. Because custody for other persons is common with crypto assets, paragraph (3) narrows its scope to prevent their inclusion in the company's own income.

Do Individuals Have the Same Mechanism?

No. Article 48-2(1) of the Income Tax Act values year-end holdings using the person's selected method to calculate necessary expenses. Article 119-2(1) of its Order likewise specifies a method using calculated acquisition cost as the year-end valuation amount.

Valuation at Acquisition Costis the approach; the income tax provisions examined here contain no rule incorporating the difference from market value into income.

Individuals do not earn income merely by holding assets at year-end. Income classification is discussed in Which category of income do individual cryptoasset earnings fall under?, and valuation-method selection and notification in The average method and moving average method — how to evaluate individual crypto assets and how to report them We are dealing with that.

Points that require care in practice

• Assets for which no price was published on the balance-sheet date. Article 118-8(1)(iii)'s parentheses require the nearest preceding published price. Preserve evidence showing which date's price was used.
• Self-issued tokens. Specified self-issued status depends on continuity since issuance (Article 61(2)(i)(b), Order Article 118-7(3)); treatment on losing status is in Article 61(6) and Order Article 118-11.
• Transfer-restricted tokens. Article 118-7(2) requires notification of specified conditions to an exchange provider or other Ministry of Finance-prescribed procedures in addition to restrictions. Restrictions alone do not establish specified transfer-restricted status.
• Crypto assets held for other companies or customers. Clarify whose account they are held for. Unsettled year-end margin transactions are separately governed by Article 61(7) and Order Article 118-12(1).
• The system is changing. Key points of the FY2026 tax system revision outline proposes changes to the crypto tax framework. An outline is not legislation, so the final rules must be checked in the amended statutory text.

Legal basis

• Corporation Tax Act, Article 61(1) (Gains and Losses on Transfers and Market Valuation of Short-Term Trading Commodities, etc.) / Quoted wording: “assets acquired to profit from short-term price fluctuations”; “crypto assets under Article 2(14) (Definitions) of the Payment Services Act (Act No. 59 of 2009).”
• Corporation Tax Act, Article 61(2) (Same) / Quoted wording: “For assets held ... the year-end valuation shall be the amount calculated using the method specified for each category (for item (ii), the corporation's selected method, or, where none was selected, the method in subitem (b)).”
• Corporation Tax Act, Article 61(2)(i) (Same) / Quoted wording: “Short-term trading commodities and similar assets (for crypto assets, limited to market crypto assets (those prescribed by Cabinet Order as having an active market; the same applies in the following item), excluding the following).”
• Corporation Tax Act, Article 61(2)(i)(a) (Same) / Quoted wording: “Specified transfer-restricted crypto assets: assets subject to transfer restrictions or other conditions, prescribed by Cabinet Order as having undergone appropriate publication procedures; the same applies in the following item.”
• Corporation Tax Act, Article 61(2)(i)(b) (Same) / Quoted wording: “crypto assets issued by that domestic corporation and continuously held since issuance”; “continuously subject from that time to transfer restrictions or other conditions.”
• Corporation Tax Act, Article 61(2)(ii) (Same) / Quoted wording: “Specified transfer-restricted market crypto assets (excluding self-issued assets): either (a) market value method or (b) cost method (using year-end book value as the valuation amount for assets held then; the same applies in the following item).”
• Corporation Tax Act, Article 61(2)(iii) (Same) / Quoted wording: “Assets other than those in the preceding two items: cost method.”
• Corporation Tax Act, Article 61(3) (Same) / Quoted wording: “For crypto assets, limited to holdings for its own account”; “notwithstanding Article 25(1) (Asset Valuation Gains) or Article 33(1) (Asset Valuation Losses), included in gross income or deductible expenses for the fiscal year containing that year-end.”
• Corporation Tax Act, Article 61(4) (Same) / Quoted wording: “For crypto assets, limited to transfers of assets held for its own account.”
• Corporation Tax Act, Article 61(6) (Same) / Quoted wording: “Where a domestic corporation holds crypto assets for its own account and they cease to qualify as specified self-issued crypto assets or another event prescribed by Cabinet Order occurs, its income for each fiscal year shall be calculated, as prescribed by Cabinet Order, deeming the assets transferred and reacquired.”
• Corporation Tax Act, Article 61(7) (Same) / Quoted wording: “the amount equivalent to the gain or loss calculated as prescribed by Ministry of Finance Order, deeming the crypto asset margin transaction settled at that time.”
• Order for Enforcement of the Corporation Tax Act, Article 118-6(6)(ii) (Methods for Calculating Book Value per Unit and Selection Procedures) / Quoted wording: “acquisition where the acquired crypto assets will be held for a person other than oneself.”
• Order for Enforcement of the Corporation Tax Act, Article 118-7(1) (Scope of Market Crypto Assets, etc.) / Quoted wording: “Crypto assets prescribed by Cabinet Order as having an active market under Article 61(2)(i) shall be assets held by a domestic corporation meeting all of the following requirements.”
• Order for Enforcement of the Corporation Tax Act, Article 118-7(1)(i) (Same) / Quoted wording: “the published trading prices and similar values materially influence determination of the asset's trading prices or exchange ratios.”
• Order for Enforcement of the Corporation Tax Act, Article 118-7(1)(ii) (Same) / Quoted wording: “transactions occur in sufficient quantity and frequency to permit continuous publication of the values in the preceding item.”
• Order for Enforcement of the Corporation Tax Act, Article 118-7(1)(iii) (Same) / Quoted wording: “the values in item (i) are published by a person other than that domestic corporation”; “the transactions in the preceding item are not primarily conducted by that corporation for its own account.”
• Order for Enforcement of the Corporation Tax Act, Article 118-7(2)(ii) (Same) / Quoted wording: “notification of specified conditions to a crypto exchange service provider (stating that conditions apply or are scheduled to apply), or other procedures prescribed by Ministry of Finance Order, has been performed.”
• Order for Enforcement of the Corporation Tax Act, Article 118-8(1) (Market Valuation of Short-Term Trading Commodities, etc.) / Quoted wording: “the amount calculated by multiplying the final published price or equivalent (for non-crypto assets, either amount in item (i) or (ii); for crypto assets, either amount in item (iii) or (iv)) by the quantity of those assets.”
• Order for Enforcement of the Corporation Tax Act, Article 118-8(1)(iii) (Same) / Quoted wording: “a person continuously publishing crypto trading prices or similar values that materially influence actual prices or exchange ratios”; “the final trading price published on the fiscal year-end date (if none is published that day, the final price on the closest preceding publication date).”
• Order for Enforcement of the Corporation Tax Act, Article 118-8(1)(iv) (Same) / Quoted wording: “the final exchange ratio for the crypto asset on the fiscal year-end date published by the price publisher.”
• Order for Enforcement of the Corporation Tax Act, Article 118-10(1) (Treatment in the Following Fiscal Year of Valuation Gains or Losses on Short-Term Trading Commodities, etc.) / Quoted wording: “An amount equivalent to the amount included by a domestic corporation in gross income or deductible expenses for a fiscal year under Article 61(3) of the Act (Gains and Losses on Transfers and Market Valuation of Short-Term Trading Commodities, etc.) shall be included in deductible expenses or gross income in calculating income for the following fiscal year.”
• Order for Enforcement of the Corporation Tax Act, Article 118-10(4) (Same) / Quoted wording: “...the amount obtained by subtracting from post-application year-end book value the equivalent of the deduction under paragraph (1), or adding the equivalent of the gross income inclusion under that paragraph.”
• Order for Enforcement of the Corporation Tax Act, Article 118-12(1) (Treatment in the Following Fiscal Year of Gains or Losses on Unsettled Crypto Asset Margin Transactions) / Quoted wording: “An amount equivalent to the amount included in gross income or deductible expenses under Article 61(7) shall be included in deductible expenses or gross income in calculating income for the following fiscal year.”
• Income Tax Act, Article 48-2(1) (Calculation of Crypto Asset Transfer Costs and Methods of Valuation) / Quoted wording: “the amount valued using the valuation method selected by that person for crypto assets.”
• Order for Enforcement of the Income Tax Act, Article 119-2(1) (Methods of Valuation of Crypto Assets) / Quoted wording: “The method shall use the calculated acquisition cost as the valuation amount for the year-end crypto assets.”