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homes with regulatory reporting requirements. See Ronnen v.
Commissioner, supra at 75-77. The corporation received, among
other things, copies of the computer program and the right to
commercially exploit the program in a particular territory. See
id. at 82-83. The master source tape was held by the seller for
security reasons and was available to HSL on an as-needed basis.
Id. at 83.
This Court found inapplicable the series of cases in the
Ninth Circuit holding that certain master sound recordings and
motion picture negatives were tangible personal property eligible
for the ITC. We distinguished the master negatives in the Disney
line of cases by stating, “HSL's software was not a ‘capital
asset’ used to create copies. In fact, HSL was not in possession
of the master tape.” Id. at 98. This Court then turned to the
Fifth Circuit's analysis in Texas Instruments, Inc. v. United
States, supra. This Court stated:
The Internal Revenue Service took the position
that the investment was in the cost of the intangible,
the seismic data, and not in the tangible films and
tapes. The Fifth Circuit interpreted the Internal
Revenue Service's argument to suggest “that property is
intangible if its intrinsic value is attributable to
its intangible elements rather than to any of its
specific tangible embodiments.” Based on this
“intrisic value” [sic] test, the court held that the
taxpayer's investment in the information was an
investment in tangible property because “the value of
the seismic data was totally dependent upon the
existence of the tapes and films. If the tapes and
film were destroyed prior to any reproduction, nothing
would remain. An investment in the data simply does
not exist without recording of the data on tangible
property.” In looking at the property's “intrinsic
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