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subsequent transfer to the computer, the intellectual property
becomes dually housed: (1) On the disk or tape, and (2) on the
computer. Moreover, an unlimited number of mirror-image transfers
of the computer program can occur; the computer program can even be
mirror-image transferred from one disk or tape to another.
A computer program can be transferred electronically over
telephone lines, although during the years in issue, telephonic
transmission was slow and unreliable. A computer program can be
erased from the disk or tape and typed in exactly anew by
programmers from written documentation of the source code without
destroying the underlying intellectual property. Clearly, a
computer program is not inextricably bound to any single tangible
medium.
II. Case Law
Beginning in 1988, this Court held in Ronnen v. Commissioner,
90 T.C. 74, that computer software is intangible personal property.
We have steadfastly applied this characterization in other cases.
See Kansas City S. Indus., Inc. v. Commissioner, 98 T.C. 242, 262
(1992); Alexander v. Commissioner, 95 T.C. 467, 470 (1990), affd.
without published opinion sub nom. Stell v. Commissioner, 999 F.2d
544 (9th Cir. 1993); Gantner v. Commissioner, 91 T.C. 713, 728
(1988), affd. on other grounds 905 F.2d 241 (8th Cir. 1990); B.D.
Morgan & Co. v. Commissioner, T.C. Memo. 1988-569; Smith v.
Commissioner, T.C. Memo. 1988-420; Salzman v. Commissioner, T.C.
Memo. 1988-86.
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