- 22 -
light of the attending facts and circumstances. See, e.g., Grodt
& McKay Realty, Inc. v. Commissioner, 77 T.C. 1221, 1237 (1981).
Petitioner acquired from NTI magnetic tapes containing
copies of the computer software necessary to make the digital
switch operable, i.e., the NTI software load, and did not acquire
any of the underlying, exclusive, intangible intellectual
property rights. See, e.g., 17 U.S.C. sec. 101 (1994) (a
nonexclusive license is not within the definition of the term
“transfer of copyright ownership”). Petitioner possessed all of
the significant benefits and burdens of ownership with respect to
those magnetic tapes. NTI simply did not retain a residuary
interest in the NTI software load commensurate with an interest
typically retained by a lessor of property. See Crooks v.
Commissioner, 92 T.C. 816, 819 (1989) (“interest retained by the
transferor is the primary distinction between a sale and a
lease”).
First, petitioner paid a fixed amount for the digital
switch, which included the cost allocable to the NTI software
load, and did not incur any obligation to make further payments
for that load, contingent or otherwise. More importantly,
petitioner acquired the exclusive right to use the NTI software
load for the useful life of the digital switch, which was
tantamount to acquiring the perpetual right to use that
particular load because of the interrelationship between the
switch hardware and software. In addition, petitioner had the
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011