Statutory definition

“Article 119-6 (Acquisition Cost of Crypto-Assets): Unless otherwise provided, the acquisition cost underlying valuation under Article 119-2, paragraph 1 (Methods of Valuing Crypto-Assets) shall be the amount specified for each category: 1. Purchased crypto-assets: purchase consideration plus purchase commissions and other acquisition expenses, if any. 2. Crypto-assets acquired through self-issuance: issuance expenses. 3. Crypto-assets other than the preceding two categories: the value ordinarily required to acquire them at the time of acquisition.”

This is Article 119-6, paragraph 1 of the Income Tax Act Enforcement Order, governing individuals’ crypto-asset acquisition costs. This article examines item 3, covering assets outside the first two categories at the value ordinarily required to acquire them at acquisition. It catches acquisitions that are neither purchases nor self-issuance.

For paragraph 1 as a whole and paragraph 2’s rules on gifts, inheritance, and bequests, see How is the acquisition price of crypto assets held by individuals determined?. Here, we focus on item 3.

Overview

The Provision Divides Acquisitions into Three Categories

Article 119-6, paragraph 1 first states that each category uses its specified amount, then lists three items. The distinction is how the crypto-assets were obtained.

Item 1 covers purchased crypto-assets at purchase consideration plus acquisition expenses. Item 2 covers self-issued crypto-assets at issuance expenses. Both use actual amounts incurred.

Item 3 covers assets outside those first two categories. Its drafting differs: the first two name an acquisition method, while item 3 merely excludes them without naming its own methods.

This has two effects. Any new acquisition method outside items 1 and 2 falls under item 3 without amending the provision. Also, the measurement changes: items 1 and 2 use actual expenditure, while item 3 uses the value ordinarily required. For assets neither purchased nor self-created, consideration may be absent or unrelated to the acquired value.

Which Cases Fall under Item 3?

This requires particular care. Article 119-6, paragraph 1, item 3 says only “crypto-assets other than those in the preceding two items.” It does not mention mining, staking, lending, airdrops, or hard forks.The statute does not expressly name these methods as falling under item 3.That distinction must remain clear.

Applying the provision’s structure gives the following analysis.

• Crypto-assets received through mining: not purchased under item 1 and not self-issued under item 2.
• Crypto-assets received as staking rewards: likewise neither purchased nor self-issued.
• Crypto-assets received as lending consideration: the same analysis applies.
• Crypto-assets distributed in an airdrop: no purchase price is paid, and the recipient did not issue them.
• Crypto-assets newly acquired through a hard fork: an acquisition involving neither purchase nor self-issuance.

Structurally, each falls under item 3, because neither item 1 nor item 2 applies—not because the provision names it. Test items 1 and 2 first; only if neither applies do you reach item 3.

Article 119-6 does not determine the income category of received crypto-assets. Acquisition cost and income classification are governed separately. For classification, see Which category of income do individual cryptoasset earnings fall under? Please see

When Is the “Value Ordinarily Required” Measured?

Item 3 uses the value ordinarily required to acquire the crypto-assets at the time of acquisition. This phrase has three parts.

The first phrase is crucial: measurement is fixed at acquisition. The provision does not say that subsequent rises or falls rewrite the established acquisition cost.Acquisition cost is fixed at receipt, and subsequent price changes do not affect it.That is the structure. Item 1’s purchase consideration and item 2’s issuance expenses also do not change retrospectively, so all three are consistent on this point.

The provision also does not use the term “fair value.” It says “value ordinarily required for acquisition.” Market prices will inform practical application, but the text does not specify which exchange, time, or quote to use.

Where Does the Established Acquisition Cost Matter Later?

Article 119-6 supplies the basis for valuation under Article 119-2, paragraph 1. Acquisition cost does not itself determine tax; it feeds later calculations.

Under the total-average method in Article 119-2, paragraph 1, item 1, beginning-of-year cost plus total acquisition cost of same-type assets acquired during the year is divided by total quantity to obtain unit cost. Item 3 amounts enter that total. Under the moving-average method, they enter the unit-cost recalculation at each acquisition.

Next comes Income Tax Act Article 48-2, paragraph 1, which addresses year-end values used to calculate amounts deductible as necessary expenses for business or miscellaneous income under Article 37, paragraph 1. Article 37 includes cost of sales and other expenses directly required to earn gross income among necessary expenses.

The sequence is individual costs under item 3, aggregation into unit cost under Article 119-2, and use in the calculations under Articles 48-2 and 37, paragraph 1.

For Corporations

Corporations have a separate provision with the same structure: Corporation Tax Act Enforcement Order Article 118-5.

“3. Short-term trading commodities, etc. other than those in the preceding two items, excluding assets acquired from a splitting, contributing, or distributing corporation through a qualified subsidiary-type split, qualified contribution in kind, or qualified distribution in kind: the value ordinarily required to acquire them at acquisition.”

The structure matches the individual rule: purchases in item 1, self-issuance in item 2, and other acquisitions in item 3, with the opening exception for cases otherwise provided. Apart from the asset label, item 3 uses the same measurement date and standard.

There is a difference: corporate item 3 expressly excludes assets received through qualified subsidiary-type splits, contributions in kind, and distributions in kind. The individual rule has no such parentheses.

Points that require care in practice

• The statute does not define exactly when acquisition occurs. Entitlement confirmation, wallet receipt, and availability for withdrawal may produce different values.
• The statute does not identify which quote represents the value ordinarily required. Exchange and timing cannot be determined from the words alone.
• For crypto-assets without a yen quote, the provision does not prescribe a conversion method.
• Where no market exists at receipt and trading begins later, the text still points only to the acquisition time.
• Where electricity or equipment costs are incurred to receive the assets, item 3 uses ordinary acquisition value rather than actual expenses.
• For acquisitions in exchange for other crypto-assets, the provision does not expressly distinguish purchase treatment under item 1 from item 3 treatment.
• Check whether the asset is a crypto-asset under Payment Services Act Article 2, paragraph 14. Otherwise Article 119-6 does not apply in the first place.
• The FY2026 tax reform indicates changes to taxation of individuals’ crypto-assets. Treatment of acquisition-cost rules must be confirmed in the statutory text. The Outline is discussed in Key points of the FY2026 tax system revision outline summarizing in

Legal basis

• Income Tax Act Enforcement Order, Article 119-6, paragraph 1 (Acquisition Cost of Crypto-Assets) / Quoted wording: “Unless otherwise provided, acquisition cost underlying valuation under Article 119-2, paragraph 1 shall be: 1. For purchased assets, purchase consideration plus commissions and other acquisition expenses. 2. For self-issued assets, issuance expenses. 3. For assets outside the preceding two categories, the value ordinarily required to acquire them at acquisition.”
• Income Tax Act Enforcement Order, Article 119-2, paragraph 1, item 1 (Valuation Methods) / Quoted wording: “Total acquisition cost of crypto-assets of the same type acquired during the year.”
• Income Tax Act, Article 48-2, paragraph 1 (Calculation of Crypto-Asset Transfer Costs and Valuation Methods) / Quoted wording: “When calculating amounts included in necessary expenses for business or miscellaneous income under Article 37, paragraph 1 (Necessary Expenses).”
• Income Tax Act, Article 37, paragraph 1 (Necessary Expenses) / Quoted wording: “Cost of sales relating to gross receipts from that income and other expenses directly required to obtain those gross receipts.”
• Corporation Tax Act Enforcement Order, Article 118-5, item 3 (Acquisition Cost of Short-Term Trading Commodities, etc.) / Quoted wording: “Assets outside the preceding two categories, excluding those acquired through qualified subsidiary-type splits, contributions in kind, or distributions in kind: the value ordinarily required to acquire them at acquisition.”
• Corporation Tax Act Enforcement Order, Article 118-5, item 2 (Acquisition Cost of Short-Term Trading Commodities, etc.) / Quoted wording: “Short-term trading commodities, etc. acquired through self-issuance.”
• Payment Services Act, Article 2, paragraph 14 (Definitions) / Quoted wording: “Property value usable with unspecified persons and purchasable and sellable with unspecified counterparties.”