- 44 -
depreciated that whole asset pursuant to ACRS. Sec.
168(c)(2)(B); Rev. Proc. 83-35, 1983-1 C.B. 745, 758. Petitioner
amortized all other software as an intangible and amortized it
pursuant to Rev. Proc. 69-21, supra, over a 5-year period.
Respondent argues that petitioner did not treat the software
as an intangible and amortize it on its income tax returns for
the years in issue, and that petitioner has not shown that a 5-
year amortization period is appropriate. Petitioner does not
need to show that a 5-year period is appropriate, for it did not
claim an amortization period less than 5 years.4
Respondent looks to the treatment of the COE into which the
software went. COE's belong to asset guideline class 48.12,
which has an asset guideline period of 18 years for purposes of
the class life asset depreciation range system. Rev. Proc. 83-
35, 1983-1 C.B. 745. Under section 168(c)(2)(B), such property
is treated as 5-year property and depreciated over 5 years.
However, as we have held, the software is intangible and
therefore does not qualify for ACRS. Accordingly, respondent has
determined that ACRS treatment is not available for the software,
but the software is still part of the COE, and therefore
depreciable over 18 years.
COHEN, CHABOT, JACOBS, GERBER, and LARO, JJ., agree with
this dissent.
4 If I had to decide whether a shorter period was appropriate, I
would take particular notice of the fact that the software loads
were updated as often as every 6 months, but at least every 2
years.
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