- 42 -
analysis was less than thorough,3 we concluded that "the
intrinsic value of the [subject] software is attributable to its
intangible elements rather than to its tangible embodiments."
Ronnen v. Commissioner, supra. Although this phrase is somewhat
ambiguous, because it appears immediately after the Texas
Instruments analysis, I would interpret it to mean that in
Ronnen, the integral connection between the intangible and
tangible present in Texas Instruments did not exist between the
software and the physical medium. The taxpayer's investment was
not in an intangible which was inextricably bound to the specific
tangible medium upon which it existed, but rather was in the
intangible alone.
Turning to the software purchased by Sprint, an examination
of what Sprint purchased, the right to a copy of source code that
would operate its switches, leads to the conclusion that the
property right is intangible.
II. Conclusion
Based on the foregoing, I cannot agree with the majority
that software is tangible. Therefore, the software is not
eligible for the ITC or ACRS treatment. I believe the following
analysis regarding depreciation of the software, in light of its
3 This discussion illustrates the hazards of adopting a standard
that is less than clear. I cannot adequately emphasize how
improper it would be to abandon our own precedent on the grounds
that it is not fully developed only to replace it by an analysis
that is equally undeveloped.
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