GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

H	1 

HOUSE BILL 372*

Short Title:  Tangible Personal Property Definition. 	(Public)
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Sponsors: Representatives Payne, Barnes, Colton, B. Ethridge, Grimmer, Jack Hunt, Redwine; Hall and Bowman.
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Referred to:  Commerce.
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Februay 27, 1989

A BILL TO BE ENTITLED
AN ACT TO AMEND THE DEFINITION OF "TANGIBLE PERSONAL PROPERTY”FOR PURPOSES OF APPLICATION OF THE SALES AND USE TAX TO POST-PRODUCTION TRANSACTIONS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105-164.3(20) reads as rewritten:
"(20)	‘Tangible personal property' means and includes personal property which may be seen, weighed, measured, felt or touched or is in any other manner perceptible to the senses.  The term ‘tangible personal property' shall not include stocks, bonds, notes, insurance or other obligations or securities, nor shall it include water delivered by or through main lines or pipes either for commercial or domestic use or consumption. The term includes all ‘canned' or prewritten computer programs, either in the form of written procedures or in the form of storage media on which or in which the program is recorded, held, or existing for general or repeated sale, lease, or license to use or consume. The term does not include the design, development, writing, translation, fabrication, lease, license to use or consume, or transfer for a consideration of title or possession of a custom computer program, other than a basic operational program, either in the form of written procedures or in the form of storage media on which or in which the program is recorded, or any required documentation or manuals designed to facilitate the use of the custom computer program.  The term does not include the design, development, writing, translation, fabrication, lease, license to use or consume, or transfer for a consideration of title or possession of a master film or master video tape.  
As used in this subdivision:
a.	‘Basic operational program' or ‘control program' means a computer program that is fundamental and necessary to the functioning of a computer. A basic operational program is that part of an operating system, including supervisors, monitors, executives, and control or master programs, which consists of the control program elements of that system. A control or master program, as opposed to a processing program, controls the operation of a computer by managing the allocation of all system resources, including the central processing unit, main storage, input/output devices, and processing programs. A processing program is used to develop and implement the specific applications the computer is to perform.
b.	‘Computer program' means the complete plan for the solution of a problem, such as the complete sequence of automatic data-processing equipment instructions necessary to solve a problem, and includes both systems and application programs and subdivisions, such as assemblers, compilers, routines, generators, and utility  programs.
c.	‘Custom computer program' means a computer program prepared to the special order of the customer. Custom computer programs include one of the following elements:
1.	Preparation or selection of the programs for the customer's use requires an analysis of the customer's requirements by the vendor; or
2.	The program requires adaptation by the vendor to be used in a particular make and model of computer utilizing a specified output device.
d.	‘Storage media' means punched cards, tapes, disks, diskettes, or drums.
e.	‘Master film or Master video tape' means films or video tapes utilized by the motion picture and television production industries in making visual images for reproduction.
f.	‘Motion picture or Television production industry' means any person engaged in an occupation or business for a livelihood or for profit of making visual motion picture or television visual images for showing on screen or television for theatrical, commercial, advertising, or educational purposes."
Sec. 2.  This act shall become effective July 1, 1989, and applies to transactions made on or after that date.