Norwest Corporation and Subsidiaries - Page 9

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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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