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Mark Hager, Robert J. Jones, and Susan K. Matlow, for
petitioner.
Robert M. Ratchford and Robert M. Fowler, for respondent.
HALPERN, Judge: Respondent determined the following
deficiencies in petitioner's Federal income taxes:
Year Deficiency
1983 $2,605,571
1984 2,442,134
1985 29,187
1986 19,301,530
Respondent also determined that the provision for increased
interest under section 6621(c) applied for 1983, 1984, and 1986.
Unless otherwise noted, all section references are to the
Internal Revenue Code in effect for the years in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
After concessions by the parties and the continuation of
other issues, the sole issue for decision is whether certain
computer software expenditures made by petitioner during the
years in issue qualify for the investment tax credit. Resolution
of that issue depends on the characterization of the acquired
software as either tangible or intangible property, as only
investments in tangible property are eligible for the investment
tax credit. We conclude that the acquired software is tangible
personal property eligible for the investment tax credit.
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