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The court in Comshare, Inc. v. United States, 27 F.3d 1142
(6th Cir. 1994), emphasized that the taxpayer therein would not
have purchased the master source code unless it was on tapes or
disks. But the intrinsic value test is not dependent upon whether
the property must appear on a tangible medium to be usable.
Rather, the test rests upon whether the software exists separate
and apart from the tangible tapes and disks. Such an
interpretation of the intrinsic value test is consistent with the
Court of Appeals for the Fifth Circuit's application of that test
in Texas Instruments. See Texas Instruments, Inc. v. United
States, supra at 611 ("the seismic information * * * [on the tapes
and film] does not exist as property separate from the physical
manifestation" (emphasis added)). Hence, because computer software
can exist separate and apart from the tangible tapes and disks, it
differs from the seismic information and should be characterized as
intangible property.
V. Majority Misreads Statement in Committee Reports
The majority, as well as the court in Comshare, Inc. v. United
States, supra, relies upon a statement (related to the type of
property eligible for the investment tax credit) made in the Senate
Finance Committee report that accompanied H.R. 10650 (which became
the Revenue Act of 1962) to support their conclusion. The Senate
Finance Committee report states, in pertinent part:
Section 38 property.--
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