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in “section 38 property” placed in service during the taxable
year. Section 48(a) defines “section 38 property” as including,
among other things, “tangible personal property”. The term
“tangible personal property” is not defined in the statute.
Section 1.48-1(c), Income Tax Regs., however, states that “the
term ‘tangible personal property’ means any tangible property
except land and improvements thereto”. Section 1.48-1(f), Income
Tax Regs., states that “[i]ntangible property, such as patents,
copyrights, and subscription lists, does not qualify as section
38 property.” In sum, the relevant statutory provisions and
regulations thereunder provide limited guidance in determining
the characterization of operating and applications software for
purposes of the ITC.
B. Case Law
The Fifth Circuit in Texas Instruments, Inc. v. United
States, supra at 611, held that seismic data tapes and film “have
intrinsic value because the seismic information thereon does not
exist as property separate from the physical manifestation” and,
therefore, were tangible personal property for purposes of the
ITC. A subsidiary of Texas Instruments, Inc. (GSID), was in the
business of collecting, processing, and selling or licensing
seismic information to customers engaged in oil and gas
exploration. Id. at 608. GSID's customers were furnished with
pictures derived from a complicated collection and editing
process that depicted the contours of the earth's different
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