In 2008, the Commissioner of the IRS signed an agreement designating Green Zip® demountable drywall technology as personal property — not real estate, thus qualifying for tax-based monetary incentives. When part of the Green Zip® Partition System™, the IRS allowed the glass; doors, frames and hardware, wall finishes; utilities and wall-associated specialties to be classified as personal property, also qualifying for the incentives.
Patented Green Zip® is the only drywall tape that can successfully remove joint compound after it has cured to full hardness. This was demonstrated for – and captured on video by – the IRS. It is the only brand that passed IRS testing; other drywall tapes failed to meet the IRS requirements to treat drywalls as personal property.5
In 2014, the IRS published a Private Letter Ruling PLR 110197-13 which concluded that “zip type partitions are tangible personal property for depreciation purposes,” making them eligible for shorter life depreciation. Drywall partitions installed using Green Zip® technology may be depreciated over five years4 as opposed to 27.5 years (residential) or 39 years (commercial) for conventional drywall. The accelerated depreciation achieved with Green Zip® can free up potentially significant cash flow for future investment by tax-paying owners/developers.
In both of the above rulings, the IRS cited Senate Report #95 as a basis for its personal property ruling. The U.S. Senate, authors and superior authority of our tax laws, clarified the tax law regarding movable partitions succinctly stating, “a movable and removable partition is tangible personal property and not a structural component.”6
In 2018, the IRS affirmed GreenZip Tape Partitions are personal property for a taxpayer/owner of apartments and hotels during a routine audit. Their CPA is available for comments.
4 The Tax Cuts and Jobs Act allows more rapid depreciation and thus greater benefit.
5 Green-Zip Tape is the only tape licensed to use patent #10,648,153; #2,643,293C; #7197853, #7451577B2 AND other Pending Patents required to assemble and disassemble drywall. Beware of any company or tax service making current claims that their demountable drywall is personal property. After a 2008 demonstration before the IRS authorities, they are keenly aware that all other drywall tapes failed to qualify for government incentives after the joint compound had been allowed to dry to near maximum hardness.
6 Senate Report #95 of 1978 was written to clarify present tax law (the 1975 Revenue Rule 75-178 and the 1975 Whiteco Industries). Senate Report #95 specifically lists three assets, including movable and removable partitions, that are personal property. All other assets must rely on Whiteco Industries factors to determine proper classification.
“MAYBE WE CAN SHOW GOVERNMENT HOW TO OPERATE BETTER AS A RESULT OF BETTER ARCHITECTURE”
— Frank Lloyd Wright
ACCOUNTING, REALTY & LAW FIRMS VALIDATED
Price Waterhouse Coopers (PWC): In February of 2014, PWC highlighted the IRS accelerated depreciation classification ruling (regarding our patented technology) on their website and featured it in their monthly Accounting Methods Spotlight.
Akin Gump Strauss Hauer & Feld: That same year, in an article published in Bloomberg BNA Daily Tax Report, David Burton, a tax attorney and partner at the law firm Akin Gump Strauss Hauer & Feld, affirmed the IRS ruling.
RSM: After a year-long vetting process, the International accounting firm RSM (formerly McGladrey) issued a ringing endorsement in 2015 and employed it on their Dallas office expansion.
CBRE has performed some 100 cost segregation studies wherein GreenZip Partitions including related glass; doors, frames & hardware; paint; finishes; electrical and plumbing; qualified as personal property in both commercial and residential rental properties.
Hines: Jerry Lea, EVP with Hines, one of the largest privately held real estate investors and managers in the world, commented regarding GreenZip, “As a developer, one of our Core Roles is to maximize the value of every invested dollar and capture the highest Net Present Value available. When a ‘game-changing’ innovation creates opportunity, our client, tenants, and investors are informed.”