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the notice of deficiency, respondent disallowed that portion of
the claimed investment tax credits and accelerated depreciation
deductions relating to the costs of the software loads.
The parties agree that, if this Court determines that
petitioner owned the software loads in issue and that those
software loads constitute tangible personal property, petitioner
is entitled to the claimed investment tax credits and accelerated
depreciation deductions. We conclude that petitioner owned the
software loads in issue and that those software loads constitute
tangible personal property. Therefore, we hold that petitioner
is entitled to the claimed credits and deductions.
B. Analysis
Today, in Norwest Corp. & Subs. v. Commissioner, 108 T.C.
___, ___ (1997) (slip op. at 27), we decided that operating and
applications software that was subject to license agreements
entitling the taxpayer to use the software on a nonexclusive,
nontransferable basis for an indefinite or perpetual term
qualifies for the ITC as tangible personal property. In holding
that the taxpayer's acquisition of the software without any
associated, exclusive, intangible intellectual property rights
was precisely the type of investment Congress intended to
encourage in enacting the ITC, we noted that “[i]ntangible
intellectual property rights and the tangible or physical
manifestations or embodiments of those rights are distinct
property interests.” Id. at ___-___ (slip op. at 26-27) (citing
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