SUPPLEMENTAL OPINION
PARR, Judge:
This matter is before the Court on respondent’s motion for reconsideration filed April 18, 1990. Petitioner Kathryn Molakides in docket No. 18367-86 filed notice of no objection to respondent’s motion. No other petitioner has filed a response to respondent’s motion.
Respondent asks us — against his own interest — to find that the at-risk rules of section 4652 do not apply to the activity of the partnerships in question, if we determine it was a “new activity” under section 465(c)(3)(A). This is because, for 12 years, respondent has failed to promulgate the regulations required to make that section viable. See sec. 465(c)(3)(E).3 See also Transco Exploration Co. v. Commissioner, 95 T.C. 373 (1990); Idaho First National Bank and its Subsidiary v. Commissioner, 95 T.C. 185 (1990); Krause v. Commissioner, 92 T.C. 1003, 1025-1026 (1989); Honeywell, Inc. v. Commissioner, 87 T.C. 624 (1986).
On March 19, 1990, the Court filed its Memorandum Findings of Fact and Opinion in this case, which was reported at T.C. Memo. 1990-141. The case presented issues related to five limited partnerships involved in computer software development: Blueprint Software (BS), Blueprint Software Professional (BSP), Quoin Software (Quoin), Matrix Business Computers (Matrix), and Computech Research Investors, Ltd. (CRI). The year in issue for BS, BSP, Quoin, and Matrix was 1982, and the year in issue for CRI was 1980. All petitioners were limited partners in one or more of the partnerships.
The third issue we considered was whether the payees of promissory notes made by each of the limited partnerships (except for CRI) held interests in the activities being financed, other than interests as creditors, within the meaning of section 465(b)(3)(A). Citing Jackson v. Commissioner, 86 T.C. 492 (1986), affd. on other issues 864 F.2d 1521 (10th Cir. 1989), and its progeny, we held that they did. Accordingly, those petitioners who were limited partners were not at risk with respect to the portion of the bases of their partnership interests attributable to the notes. To the extent petitioners were not at risk, their distributive shares of partnership losses were not deductible.
It is the policy of this Court to try all the issues raised in a case in one proceeding to avoid piecemeal and protracted litigation. The granting of a motion for reconsideration rests within the discretion of the Court, and will not be granted unless unusual circumstances or substantial error is shown. Vaughn v. Commissioner, 87 T.C. 164, 166-167 (1986).
Respondent’s motion questions whether section 465(b)(3)(A) applies to the software development activities of the limited partnerships. Respondent freely admits that neither party focused on this issue until now. Nevertheless, our previous holding that petitioners were not at risk was based upon the premise that section 465(b)(3)(A) applied to the software development activities of the partnerships. Accordingly, it is imperative that we address this issue.
Section 465 was enacted as part of the Tax Reform Act of 1976 (TRA 76). Sec. 204, Pub. L. 94-455, 90 Stat. 1520, 1531. In general, any loss from an activity governed by section 465 is allowed only to the extent of the aggregate amount that a taxpayer is at risk for such activity at the close of the taxable year. Sec. 465(a). Section 465(b)(3)(A) provided that amounts borrowed for use in an activity are not considered to be at risk if such amounts are borrowed from any person who “has an interest (other than an interest as a creditor) in such activity.” As originally enacted, the at-risk rules applied only to taxpayers engaged in any of four listed activities (“old activities”), including leasing any section 1245 property (as defined in section 1245(a)(3)). Sec. 465(c)(1).4
Is the activity in question an “old activity”?
In his motion for reconsideration respondent, for the first time, suggests that the limited partnerships were engaged in the leasing of section 1245 property, within the meaning of section 465(c)(1)(C). If respondent is correct, then the at-risk limitation of section 465(b)(3)(A) applies, and petitioners would not be allowed to deduct the portion of the bases of their partnership interests attributable to the notes.
Respondent’s entire argument on this point is as follows:
If the Court concludes that the petitioners were engaged in the leasing of section 1245 property, which is an old activity under section 465(c)(1)(C), then section 465(b)(3) is applicable to the petitioners’ activities.
No reasoning or citations to the record or to law are offered to assist the Court in reaching such a conclusion. We conclude the activity in question is not an old activity.
The at-risk rules of section 465 are to be applied to the relevant facts of a transaction as they exist at the end of each taxable year. Krause v. Commissioner, 92 T.C. 1003, 1025 (1989).
The term “section 1245 property” is defined in section 1245(a)(3) as including personal property “which is or has been property of a character subject to the allowance for depreciation provided in section 167.” The term “personal property” is defined in the regulations as including both tangible and intangible personal property. Sec. 1.1245-3(b), Income Tax Regs.
Computer software is intangible personal property. Ronnen v. Commissioner, 90 T.C. 74, 100 (1988). Since computer software is intangible personal property it is depreciable if at all under section 167 (not ACRS or MACRS). See sec. 168.
Section 167(a) provides that there shall be allowed as a depreciation deduction a reasonable allowance for the exhaustion, including obsolescence, of property used in a trade or business. “The term ‘property’ includes intangibles.” Computing & Software, Inc. v. Commissioner, 64 T.C. 223, 231-232 (1975). Section 1.167(a)-3, Income Tax Regs., sets forth the ground rules for the allowance of the depreciation deduction for intangibles, as follows:
Sec. 1.167(a)-3 Intangibles.
If an intangible asset is known from experience or other factors to be of use in the business or in the production of income for only a limited period, the length of which can be estimated with reasonable accuracy, such an intangible asset may be the subject of a depreciation allowance. Examples are patents and copyrights. An intangible asset, the useful life of which is not limited, is not subject to the allowance for depreciation. No allowance will be permitted merely because, in the unsupported opinion of the taxpayer, the intangible asset has a limited useful life. No deduction for depreciation is allowable with respect to goodwill. * * *
We hold that, in the present case, the computer software was not “property of a character subject to the allowance for depreciation provided in section 167” for two reasons. First, during the years in issue, which were startup years, the software had not yet been developed. There was only a contract to develop such software. There was, in fact, not yet any “property” capable of being depreciated.
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SUPPLEMENTAL OPINION
PARR, Judge:
This matter is before the Court on respondent’s motion for reconsideration filed April 18, 1990. Petitioner Kathryn Molakides in docket No. 18367-86 filed notice of no objection to respondent’s motion. No other petitioner has filed a response to respondent’s motion.
Respondent asks us — against his own interest — to find that the at-risk rules of section 4652 do not apply to the activity of the partnerships in question, if we determine it was a “new activity” under section 465(c)(3)(A). This is because, for 12 years, respondent has failed to promulgate the regulations required to make that section viable. See sec. 465(c)(3)(E).3 See also Transco Exploration Co. v. Commissioner, 95 T.C. 373 (1990); Idaho First National Bank and its Subsidiary v. Commissioner, 95 T.C. 185 (1990); Krause v. Commissioner, 92 T.C. 1003, 1025-1026 (1989); Honeywell, Inc. v. Commissioner, 87 T.C. 624 (1986).
On March 19, 1990, the Court filed its Memorandum Findings of Fact and Opinion in this case, which was reported at T.C. Memo. 1990-141. The case presented issues related to five limited partnerships involved in computer software development: Blueprint Software (BS), Blueprint Software Professional (BSP), Quoin Software (Quoin), Matrix Business Computers (Matrix), and Computech Research Investors, Ltd. (CRI). The year in issue for BS, BSP, Quoin, and Matrix was 1982, and the year in issue for CRI was 1980. All petitioners were limited partners in one or more of the partnerships.
The third issue we considered was whether the payees of promissory notes made by each of the limited partnerships (except for CRI) held interests in the activities being financed, other than interests as creditors, within the meaning of section 465(b)(3)(A). Citing Jackson v. Commissioner, 86 T.C. 492 (1986), affd. on other issues 864 F.2d 1521 (10th Cir. 1989), and its progeny, we held that they did. Accordingly, those petitioners who were limited partners were not at risk with respect to the portion of the bases of their partnership interests attributable to the notes. To the extent petitioners were not at risk, their distributive shares of partnership losses were not deductible.
It is the policy of this Court to try all the issues raised in a case in one proceeding to avoid piecemeal and protracted litigation. The granting of a motion for reconsideration rests within the discretion of the Court, and will not be granted unless unusual circumstances or substantial error is shown. Vaughn v. Commissioner, 87 T.C. 164, 166-167 (1986).
Respondent’s motion questions whether section 465(b)(3)(A) applies to the software development activities of the limited partnerships. Respondent freely admits that neither party focused on this issue until now. Nevertheless, our previous holding that petitioners were not at risk was based upon the premise that section 465(b)(3)(A) applied to the software development activities of the partnerships. Accordingly, it is imperative that we address this issue.
Section 465 was enacted as part of the Tax Reform Act of 1976 (TRA 76). Sec. 204, Pub. L. 94-455, 90 Stat. 1520, 1531. In general, any loss from an activity governed by section 465 is allowed only to the extent of the aggregate amount that a taxpayer is at risk for such activity at the close of the taxable year. Sec. 465(a). Section 465(b)(3)(A) provided that amounts borrowed for use in an activity are not considered to be at risk if such amounts are borrowed from any person who “has an interest (other than an interest as a creditor) in such activity.” As originally enacted, the at-risk rules applied only to taxpayers engaged in any of four listed activities (“old activities”), including leasing any section 1245 property (as defined in section 1245(a)(3)). Sec. 465(c)(1).4
Is the activity in question an “old activity”?
In his motion for reconsideration respondent, for the first time, suggests that the limited partnerships were engaged in the leasing of section 1245 property, within the meaning of section 465(c)(1)(C). If respondent is correct, then the at-risk limitation of section 465(b)(3)(A) applies, and petitioners would not be allowed to deduct the portion of the bases of their partnership interests attributable to the notes.
Respondent’s entire argument on this point is as follows:
If the Court concludes that the petitioners were engaged in the leasing of section 1245 property, which is an old activity under section 465(c)(1)(C), then section 465(b)(3) is applicable to the petitioners’ activities.
No reasoning or citations to the record or to law are offered to assist the Court in reaching such a conclusion. We conclude the activity in question is not an old activity.
The at-risk rules of section 465 are to be applied to the relevant facts of a transaction as they exist at the end of each taxable year. Krause v. Commissioner, 92 T.C. 1003, 1025 (1989).
The term “section 1245 property” is defined in section 1245(a)(3) as including personal property “which is or has been property of a character subject to the allowance for depreciation provided in section 167.” The term “personal property” is defined in the regulations as including both tangible and intangible personal property. Sec. 1.1245-3(b), Income Tax Regs.
Computer software is intangible personal property. Ronnen v. Commissioner, 90 T.C. 74, 100 (1988). Since computer software is intangible personal property it is depreciable if at all under section 167 (not ACRS or MACRS). See sec. 168.
Section 167(a) provides that there shall be allowed as a depreciation deduction a reasonable allowance for the exhaustion, including obsolescence, of property used in a trade or business. “The term ‘property’ includes intangibles.” Computing & Software, Inc. v. Commissioner, 64 T.C. 223, 231-232 (1975). Section 1.167(a)-3, Income Tax Regs., sets forth the ground rules for the allowance of the depreciation deduction for intangibles, as follows:
Sec. 1.167(a)-3 Intangibles.
If an intangible asset is known from experience or other factors to be of use in the business or in the production of income for only a limited period, the length of which can be estimated with reasonable accuracy, such an intangible asset may be the subject of a depreciation allowance. Examples are patents and copyrights. An intangible asset, the useful life of which is not limited, is not subject to the allowance for depreciation. No allowance will be permitted merely because, in the unsupported opinion of the taxpayer, the intangible asset has a limited useful life. No deduction for depreciation is allowable with respect to goodwill. * * *
We hold that, in the present case, the computer software was not “property of a character subject to the allowance for depreciation provided in section 167” for two reasons. First, during the years in issue, which were startup years, the software had not yet been developed. There was only a contract to develop such software. There was, in fact, not yet any “property” capable of being depreciated. And, secondly, there is no evidence in the record from which we can estimate a useful life with reasonable accuracy, as required by the regulations.
Accordingly, we hold that the software was not section 1245 property.5 As a result, the limited partnerships were not engaged in the activity of leasing section 1245 property, under section 465(c)(1)(C).
Do the at-risk limitations apply to “new activities”?
Respondent alternatively argues that if the limited partnerships were not engaged in the activity of leasing section 1245 property, then section 465(b)(3)(A) does not apply to this case. Respondent makes this argument even though it is adverse to his interest in this case. If respondent is correct, then our previous holding that the at-risk rules applied to limit deductions by those petitioners who were limited partners was erroneous.
Section 465(c)(3) was enacted as part of the Revenue Act of 1978 (RA 78), Pub. L. 95-600, sec. 201, 92 Stat. 2763, 2814, and provides in pertinent part:
(3) Extension to Other Activities.—
(A) In General. — In the case of taxable years beginning after December 31, 1978, this section also applies to each activity—
(i) engaged in by the taxpayer in carrying on a trade or business or for the production of income, and
(ii) which is not described in paragraph (1).
*******
(D) Application of Subsection (b)(3). — In the case of an activity described in subparagraph (A), subsection (b)(3) shall apply only to the extent provided in regulations prescribed by the Secretary.
The Secretary has not yet published final regulations concerning the application of section 465(b)(3) to the new activities listed in section 465(c)(3)(A).6
Respondent explains his argument in his motion for reconsideration as follows:
In Jackson v. Commissioner, 86 T.C. 492 (1986), aff'd, 864 F.2d 1521 (10th Cir. 1989), the Court recognized at 86 T.C. 528 n. 25 that the Secretary was directed by Congress to prepare regulations applying section 465(b)(3) to the new activities [of section 465(c)(3)(A)]. Although the final regulations had not been issued, the Court applied section 465(b)(3) and found that the taxpayers in Jackson were not at risk for purposes of section 465. On appeal, the government was sustained on other grounds and the section 465 issues were not reached. Moreover, under Rev. Rul. 77-397, 1977-2 C.B. 198, the respondent believed that the taxpayers in Jackson were engaged in an old activity [of section 465(c)(1)].
*******
Notwithstanding the apparent application of section 465(b)(3) to a new activity by the Court in Jackson, the respondent believes that if the petitioners herein were engaged in a new activity under section 465(c)(l)[sic](A) for the years in question, then the limitations imposed by section 465(b)(3) are not applicable with respect to the petitioners’ investments in BSP, Matrix, BS, and Quoin, and the respondent requests that the Court revise its opinion to reflect the application of section 465(c)(3)(D).
We agree with respondent.
The partnerships were not engaged in an activity listed in section 465(c)(1). The parties agreed at trial that petitioners invested in the partnerships with the objective of making a profit. See sec. 183; Dreicer v. Commissioner, 78 T.C. 642 (1982), affd. without opinion 702 F.2d 1205 (D.C. Cir. 1983). We take this to mean that the parties also agree that the activities of the partnerships fall within the ambit of section 465(c)(3)(A).
Section 465(c)(3)(D) unambiguously provides that section 465(b)(3) “shall apply only to the extent provided in regulations prescribed by the Secretary,” to an activity described in section 465(c)(3)(A). Regulations have not been prescribed by the Secretary. Accordingly, we hold that section 465(b)(3) does not apply to the activities of the limited partnerships.7
Respondent argues that under Rev. Rul. 77-397, 1977-2 C.B. 178, he believed that the taxpayers in Jackson v. Commissioner, 86 T.C. 492 (1986), affd. 864 F.2d 1521 (10th Cir. 1989), were engaged in an activity listed in section 465(c)(1). This may have been respondent’s belief, but our opinion in Jackson makes no reference to that revenue ruling or its reasoning. The Court clearly applied section 465(b)(3) to an activity encompassed by section 465(c)(3)(A). See Jackson v. Commissioner, 86 T.C. at 526-529.8 Accordingly, we will no longer follow the portion of Jackson that stands for the proposition that section 465(b)(3) may be applied to an activity set forth in section 465(c)(3)(A), where regulations have not been prescribed by the Secretary as mandated by section 465(c)(3)(D).9
To reflect the foregoing,
Appropriate orders will be issued.
Reviewed by the Court.
Nims, Chabot, Parker, Korner, Hamblen, Cohen, Clapp, Swift, Jacobs, Gerber, Wright, Wells, Ruwe, and COLVIN, JJ., agree with the majority opinion. Whalen, J., concurs in the result only. APPENDIX
Docket No. Petitioner
15015-86 Charles F. and Yvette M. Alexander
20946-86 John J. Antel, Deceased, and Adelaide C. Antel
20852-86 David W. and Kathy Arana
20389-86 John T. and Mildred E. Bennett
20497-86 Allen K. and Patti R. Brooks
21473-86 Donald R. Chiamparino
21101-86 Gary E. and Nancy DeMartini
21099-86 Eddie S. and Janice Fink
21084-86 Felix and Elinor Gatto
20388-86 Gerald J. Gleason, Jr.
20457-86 Varney and Barbara Glowner
20387-86 Imelda Hampton
21097-86 Robert M. and Alicia P. Herman
21102-86 Melvyn L. and Maureen C. Hetzel
20476-86 Jo Ann Ison
20205-86 Richard F. and Carol Johnstone
20498-86 Michael Knaak
20341-86 William H. and Joan Kirk
18488-86 Estate of Lester L. Lewis, Deceased, Steve Wechsler, Executor, and Florence Lewis
20875-86 Abe S. and Sara Rae Miller
18367-86 George and Kathryn Molakides
20403-86 Giovanni P. and Ines B. Oldini
20915-86 Martin F. and Pattianne N. Parker
20944-86 Albert and Agnes Piccetti
20404-86 John and Nicole Piccetti
20947-86 Roy L. and Barbara Quilici
20478-86 Douglas N. and Elizabeth R. Reid
21434-86 Primo R. and Naomi J. Repetto
21100-86 Salvadore J. and Linda M. Rizzo
20405-86 Anthony J. and Barbara Ann Scafine
21085-86 Harold and Dorothy Siner
20450-86 Patricia A. Steele
21382-86 David W. and Kathleen Stell
20342-86 Gregg S. and Linda D. Taylor
21018-86 Lance Thomson
20945-86 Vondina W. Thomson
20291-86 Terry L. and Laurie S. Weitzman
21483-86 Jim D. White