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Nortel Networks Inc. v. Board of Equalization … (2011)

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Telephone Switching Software Qualifies for Treatment Under Technology Transfer Agreement Statutes.

The Court of Appeal held that certain agreements, under which the taxpayer licensed software programs to run telephone switches it sold to its customer, qualified as technology transfer agreements (TTAs), so that the portions of the lump-sum charges attributable to licenses of intangible patent and copyright interests were excluded from tax. The Court of Appeal further held that licenses of certain prewritten programs that provided the taxpayer's customer various administrative functions in connection with the operation of the switches also qualified for TTA treatment. In so holding, the Court of Appeal held invalid a portion of Sales and Use Tax Regulation 1507 providing that sales of prewritten software could never qualify for TTA treatment. Nortel Networks Inc. v. Board of Equalization (2011) 191 Cal.App.4th 1259.