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OPINION
I. Introduction
A. Issue
Petitioner purchased during the years in issue operating and
applications software for use in its banking and financial
services businesses. The software was acquired subject to
license agreements that entitled petitioner to use the software
on a nonexclusive, nontransferable basis for an indefinite or
perpetual term. Petitioner did not purchase any exclusive
copyright rights or other intellectual property rights underlying
any of the software in issue and was not permitted to reproduce
the software outside the Norwest affiliated group. The sole
issue for decision is whether petitioner's software expenditures
qualify for the investment tax credit (ITC). Resolution of that
issue depends on the characterization of the acquired software as
either tangible or intangible property. We conclude that the
acquired software is tangible personal property eligible for the
investment tax credit.
B. Arguments of the Parties
Petitioner contends that the computer software it purchased
during the years in issue constitutes tangible personal property
eligible for the investment tax credit under section 38.
Petitioner's position stems from its interpretation of the
“intrinsic value” test first enunciated by the Court of Appeals
for the Fifth Circuit (the Fifth Circuit) in Texas Instruments,
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Last modified: May 25, 2011