The actual terms of Japan's surrender and the negotiations that took place to come to that agreement are basically contained in four documents. The first is the Potsdam Declaration issued on July 26, 1945. The second is a diplomatic cable sent on August 10th through the government of Switzerland that included the following text:

The Japanese Government are ready to accept the terms enumerated in the joint declaration which was issued at Potsdam on July 26, 1945, by the heads of the Governments of the United States, Great Britain, and China, and later subscribed by the Soviet Government with the understanding that the said declaration does not comprise any demand which prejudices the prerogatives of His Majesty as a Sovereign Ruler.

The Allied reply was cabled on August 11th also through Switzerland.

With regard to the Japanese Government's message accepting the terms of the Potsdam proclamation but containing the statement, "with the understanding that the said declaration does not comprise any demand which prejudices the prerogatives of His Majesty as a sovereign ruler," our position is as follows:

From the moment of surrender the authority of the Emperor and the Japanese Government to rule the state shall be subject to the Supreme Commander of the Allied powers who will take such steps as he deems proper to effectuate the surrender terms.

...

The ultimate form of government of Japan shall, in accordance with the Potsdam Declaration, be established by the freely expressed will of the Japanese people.

The armed forces of the Allied Powers will remain in Japan until the purposes set forth in the Potsdam Declaration are achieved.

The Imperial rescript announcing the end of the war was played on Japanese radio on August 15th, and the Instrument of Surrender was signed on September 2nd.

The historical record of what was being discussed by the Japanese government internally as well as cables sent to Ambassador Sato seeking Soviet help in ending the war seem to imply retention of occupied lands was not top of mind to the Japanese government. While the instructions that Foreign Minister Togo sent to Sato were frustratingly vague on what they were offering the Soviets, they did offer: "attractive terms of peace, including withdrawal of Japanese troops from all occupied territory, to appeal to U.S. and British war weariness." The US was aware of these communications as all diplomatic cables to and from Japan were being read by US diplomats through the MAGIC program often before being read by their intended recipient.

What the war faction within the Japanese government seemed to be most concerned with was maintaining this mythology that Japan had never been defeated. In addition to retention of the Imperial Polity, those topics included occupation of the Japanese homelands, war crimes trials, and retaining the ability for the military to disarm itself. These were all only internal discussions, so not really part of the surrender negotiations.