A Pillsbury Client Alert for 15 October ("Client Alert—Bundled or Embedded Applicational Software Is Not Subject to Personal Property Taxation", by Richard E. Nielsen) records that California’s Fourth District Court of Appeal has held that application software is not subject to property taxation even if it comes “bundled” with computer hardware. This decision reverses the position taken by the trial court and Orange County Assessment Appeals Board.This ruling turned on the legal status of the Pyxis MedStation 2000 system, which Cardinal Health 301 leased to hospitals. The system is a series of stand-up medicine storage cabinets (MedStations), each with a built-in computer that serves as a medicine tracking system and is programmed with patient and medication information. The software was provided together with each MedStation as a "bundle" rather than being separately priced.
