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strata. Id. The Fifth Circuit described that process as
follows:
The method used in collecting the seismic data
needed to produce such pictures was to introduce sound
into the ground and then capture the various reflected
vibrations from the subterrain in microphone-like
receivers. Those receivers then transmitted the
electronic impulses to recording stations where the
impulses were transcribed onto magnetic computer tapes
known as “field” tapes. From there the impulses
recorded on the field tapes were taken to a processing
center where background noise or signals were
eliminated. With the retained or primary signals
sharpened by the editing process, a “final” or “output”
tape was produced. Using a computer, the information
contained on the output tapes as electronic impulses
was then transformed into a picture representing a
vertical slice of the earth. The computers through
which the field tapes were processed are digital
computers and the reflex signal data were placed on the
output tapes in digital form. [Id.]
The Fifth Circuit explained its holding as follows:
[T]he value of the seismic data is entirely dependent
upon existence of the tapes and film. If the tapes and
film were destroyed prior to any reproduction of the
film analog, nothing would remain. An investment in
the data simply does not exist without recording of the
data on tangible property. Thus the basis of the
tangible tapes and films must include the costs of
collecting seismic * * * data and recording it on the
tangible property, with the result being an asset
constituting “tangible personal property.” [Id. at
611.]
This Court in Ronnen v. Commissioner, 90 T.C. 74 (1988),
adopted the so-called intrinsic value test created by the Fifth
Circuit in Texas Instruments, Inc. v. United States, 551 F.2d 599
(5th Cir. 1977). In Ronnen, the taxpayers were principal
shareholders of an S corporation, HSL, formed to purchase the
rights to a computer software package designed to assist nursing
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