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(1) Sprint owned the software in issue and (2) the software
qualifies as tangible personal property.
Respondent concedes that if Sprint in fact owned the
software and the software constitutes tangible property, Sprint
is entitled to the ITC and accelerated depreciation, as claimed.
If Sprint did not own the software in issue, or if the software
is not tangible personal property, respondent contends that
Sprint is entitled to amortize the cost of the software on a
straight-line basis over an 18-year period, while Sprint contends
that the costs should be amortized in accordance with Rev. Proc.
69-21, sec. 4.01(2), 1969-2 C.B. 303. The 18-year period is the
class life asset depreciation range (CLADR) midpoint life of the
switch hardware with which the software is associated. Rev.
Proc. 69-21, sec. 4.01(2), supra, is the procedure pursuant to
which, during 1982 through 1985, Sprint capitalized and amortized
the cost of purchased software, other than the software purchased
in connection with the digital switches (rather than claiming the
ITC and accelerated depreciation under the ACRS).
B. Drop and Block Issue
A telephone network includes transmission facilities and
station equipment (or station apparatus). Transmission
facilities consist of the wiring and ancillary equipment used to
transmit telephone signals between the telephone company's
central office and the customer's (whether caller or callee)
station apparatus (i.e., telephone, modem, or other device).
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