FREQUENTLY ASKED QUESTIONS
WHAT IS GREEN ZIP®?
Green Zip® Technology is a demountable drywall partition system and cash flow solution. The patented process allows for the installation of drywalls that can be removed, relocated and reused, offering significant financial benefits and increased cash flow for investors in commercial and residential apartment buildings.
WHO INVENTED GREEN ZIP®?
Green Zip® was created by W. Frank Little, AIA, NCARB, ASID. Mr. Little, a former Gensler & Associates architect, holds a Master of Science in Architecture / Tax Law from Texas A&M University.
HOW DOES GREEN ZIP® WORK?
Conventional gypsum drywall, removable screws and metal or wood studs are used with the self-adhesive Green Zip Tape. Drywall panels may be installed using Green Zip tape vertically or horizontally to non-load bearing partitions not located at elevators or building cores. Green Zip won’t add to the construction schedule or budget.
- Attach drywall to metal or wood studs with removable screws
- Instead of mudding over the screws and drywall joints, the self-adhesive Green Zip® Tape is applied first
- Float the finish coat of mud compound over the Green Zip Tape
- Pull tape up through the mud and paint to expose the screws beneath
- Remove the screws with a power drill
- Remove the drywall panels and stack on cart for reuse
WHAT’S SO “GREEN” ABOUT GREEN ZIP®?
Business Week reports the manufacture of drywall alone “accounts for 1% of all the energy used by U.S. industry, and thus a comparable percentage of all industry emissions.” An estimated 26% of the waste in a construction landfill is drywall. Green Zip® patented technology allows non-load bearing drywall partitions to be removed, relocated and re-used in both new construction and renovation projects. This is an environmentally responsible and sustainable alternative to demolishing the interior space of buildings.
Using our product can:
- Reduce the manufacture of new drywall and the associated environmental impact
- Provide a means to comply with local landfill diversion and green building requirements
- Divert tons of drywall from landfills where it can leech poisonous Hydrogen Sulfide, a greenhouse gas, into our air and water as it decomposes
- Reduce carbon emissions associated with the transportation of drywall waste to landfills
- Make healthier buildings by avoiding the dust and noise associated with demolition and allow easier access to internal parts of the building to assist in mold mitigation
HAS GREEN ZIP® BEEN PROFESSIONALLY RECOGNIZED IN THE SUSTAINABLE BUILDING INDUSTRY?
Yes. In 2010, Green Zip® received the prestigious R+D Award from The Journal of the American Institute of Architects. Green Zip® has also received new product awards from both the Environmental Protective Agency (EPA) and the American Institute of Architects (AIA) in their Lifecycle Building Challenge. Green Zip® construction technology is recognized as being eligible for LEED credit by the US Green Building Council (USGBC).
WHO HAS USED GREEN ZIP®?
We’re proud that our clients include Americare Senior Living, Bank of America, Bank of the Ozarks, Chevron, Embassy Suites, Holiday Inn / InterContinental Hotels Group, the City of Houston, International Paper, Koch Industries, NRG Energy… just to name a few.
DOES GREEN ZIP® MAKE IT HARDER TO INSTALL DRYWALL? I DON’T WANT TO SLOW CONSTRUCTION TIME.
No. In fact, Green Zip® technology speeds the time of drywall installation:
- Green Zip® tape is backed with a strong adhesive, eliminating the need for a mud base coat over seams
- Using our patented Zip Stick®, in conjunction with a flat box mud applicator, speeds the taping process
- Our Zip Stick® applicator weighs about 4 pounds, compared to a “Bazooka” type drywall applicator that can weigh as much as 18 pounds (fully loaded with joint compound or “mud”)
- Zip Stick® requires no maintenance. A “Bazooka” type drywall applicator must be cleaned and oiled at the end of each day’s use
DOES GREEN ZIP® ONLY WORK ON METAL STUDS? WHAT ABOUT WOOD/STICK FRAMING?
Green Zip® can be installed on both metal and wood stud frames using removable screws.
WHAT ABOUT THE MIDDLE WALL STUDS?
There are three methods of attaching drywall panels to the “middle” or “field” studs:
METHOD 1: Use drywall screws at normal spacing per architect’s specifications. Method #1 is required for UL fire rating. Disassembly takes a minute longer per panel than Methods #2 and #3, but with one person holding each end of the drywall panel that has been “unzipped,” (i.e. joints exposed and unscrewed), the middle screws easily pull through the wall with minimal damage.
METHOD 2: Use 2 drywall screws at middle / field studs; one about every 3 feet
NOTE: DO NOT apply Green Zip Tape over middle / field stud screws
METHOD 3: Use two parallel beads of painter’s no-silicone caulking about every 3 feet on the middle / field studs (each bead should be about 3 inches long by about ¾ inch diameter). We have installed millions of square feet of drywall using this method without any failure. This method saves the contractor additional time/steps because it omits the need to float and sand the middle / field stud screws, giving most panels a level five finish without additional labor.
DISASSEMBLY: To de-construct and move above partitions, first “unzip” the Green Zip Tape, exposing the panel edge screws for removal. This allows one person holding each end of the drywall panel to lift both edges and then work the panel off of the middle / field stud screws of Methods #1 and #2 – OR – to disengage the releasable adhesive caulking of Method #3.
DO I HAVE TO USE HOT MUDD / QUICK SET / CHEMICALLY DRYING JOINT COMPOUND?
No. Just float normal, every day joint compound over the Green Zip® Tape.
HOW DOES GREEN ZIP® BENEFIT COMMERCIAL BUILDING OWNERS?
When retrofitting interior space for tenant requirements, reusable Green Zip® drywall partitions can reduce costs:
- Provides a means to comply with local landfill diversion and green building requirements
- Reduces project related landfill costs, time, and transportation
- Provides a hedge against future, ever-increasing landfill tipping and waste costs
- Avoid noisy, dusty demolition saws and sledgehammers, reducing demo costs, time and the potential for demo-related accidents
- Allows “quiet” remodel work during normal business hours (not just nights & weekends when labor is more expensive) without disturbing adjacent occupants
- Allows re-use of materials already on-site, further reducing time and costs. A reduction in retrofitting time can also reduce labor costs and employee or tenant downtime during a remodel
- Allows access to internal parts of the building to assist in building system repairs or mold mitigation
CAN YOU REUSE DRYWALL?
Yes. Turner Construction (an international construction firm known for embracing new technologies) documented a retrofitting case study for British Petroleum that substantiates and endorses the product’s effectiveness. Green Zip® technology has won awards from the EPA and the AIA and has been accepted for LEED credit by the USGBC.
WHAT FINANCIAL BENEFITS DOES GREEN ZIP® PROVIDE?
Green Zip® demountable drywall partition technology can:
- Accelerate depreciation
- Reduce near-term tax liability
- Increase Cash Flow
- Reduce retrofitting costs
The IRS has ruled that removable drywalls classify as personal property. This qualifies them for shorter life depreciation than conventionally installed drywalls — 5 years as opposed to 27.5 years for residential rental property or 39 years for commercial buildings. Installation of removable drywall partitions using the patented Green Zip® technology – in both new construction and renovation projects – may provide commercial real estate investors with improved cash flow and lower remodel costs.
DO THE FINANCIAL BENEFITS OF GREEN ZIP® APPLY TO RENOVATION CONSTRUCTION?
Yes. The same financial benefits (accelerated depreciation) can be applied to renovation projects. Once used, Green Zip® can help reduce the cost of future renovations. In 2013, Turner Construction (an international construction firm known for embracing new technologies) documented a retrofitting case study for British Petroleum that substantiates and endorses the projects effectiveness. Turner estimated that the cost savings achieved with Green Zip® amounted to $110 per linear foot when a wall is relocated.
WHAT TYPES OF BUILDINGS QUALIFY FOR THE FINANCIAL BENEFITS?
Any commercial property constructed or purchased after 1986. Per IRS Private Letter Ruling PLR 110197-13, buildings that fall within Business Activity Asset Class 57.0 – Distributive Trades and Services. Asset Class 57.0 includes commercial building assets used in wholesale and retail trade and personal and professional services; this encompasses office buildings, hotels, motels, medical office facilities, hospitals and any professional services buildings, such as banks, small businesses and wholesale/ retail merchants.
DO APARTMENT BUILDINGS AND ASSISTED LIVING FACILITIES QUALIFY?
Yes. IRS Private Letter Ruling PLR 110197-13 stipulates that the accelerated depreciation classification “…depends on whether the partitions are inherently permanent structures…” The intent to relocate and reuse walls is not a determining factor in qualifying assets for shorter-life depreciation. It is the possibility – and the ability – to change wall configuration that qualifies. There are many precedent-setting examples of residential rental buildings being updated or reconfigured to remain competitive that provide evidence of the unforeseen need to remove and reuse drywalls in apartments.
DO I HAVE TO USE GREEN ZIP® TAPE TO GET THESE TAX BENEFITS? CAN ANY DRYWALL TAPE BE USED?
Only Green Zip® Tape is recognized by the IRS to allow for the accelerated depreciation associated with the potential demounting and reuse of gypsum drywall. In a 2008 video audit conducted by the IRS, Green Zip® Tape was the only drywall joint tape out of 20 plus competitive brands that performed to IRS specifications and allowed the drywall joints to be “unzipped,” successfully exposing the seam and drywall screws. There is no other way to get these added tax benefits other than using our patented process and tape.
IS THE NET BENEFIT THE ADDED VALUE THAT COMES FROM RECEIVING TAX DEDUCTIONS QUICKER?
Yes, the benefit we provide is considered the added time value of money from receiving tax deductions sooner, not simply the amount of the deductions.
CAN WE GET THIS BENEFIT IF WE DON’T EVER MOVE THE WALLS?
Yes. You don’t ever have to move the walls to qualify for the tax benefit; the construction method itself, which provides the potential to move the walls, is what qualifies. The intent to relocate and reuse walls is not a determining factor.
IF WE DON’T EVEN INTEND TO MOVE THE WALLS ARE WE STILL ELIGIBLE FOR THE TAX BENEFIT?
Yes. In 1975, the US Tax Court established criteria (under Whiteco Industries, Inc. v. Commissioner) to define assets as “tangible personal property.” Whiteco Criteria #3 defines “ . . . intended lengths of affixation, i.e. are there circumstances which show that the property may or will have to be moved?” The construction method itself, which provides the potential to move the walls, is what qualifies. The intent to relocate and reuse walls is not a determining factor. The fact that you may have to move constructed walls at some future point meets this criterion as part of the IRS Cost Segregation Audit Techniques Guide. We have lists of commonly accepted reasons for moving commercial construction walls, specific to each building type.
WHAT IS A COST SEGREGATION STUDY? IS IT REQUIRED TO CLAIM THE TAX BENEFIT?
Under US Tax laws and accounting rules, a cost segregation analysis identifies and reclassifies personal property assets from real property assets to shorten their depreciation time for tax reporting purposes; this reduces current income tax obligations. A cost segregation study is needed to determine the value of the assets, including demountable drywall partitions, which can be treated as personal property under the federal tax code and depreciated over a five-year period as opposed to 27.5 years for residential rental property or 39 years for commercial buildings.
IS THIS A LEGAL TAX STRATEGY? I’VE NEVER HEARD OF ANYTHING LIKE THIS BEFORE.
Yes. Green Zip® is the only drywall tape that will successfully remove mud compound after it has cured to full hardness. This was demonstrated for – and captured on video by – senior IRS attorneys to get their validation and acceptance of the product and to prove that our patented construction method qualifies for a reclassification of assets. It is the only brand of drywall tape that passed the IRS test; the other drywall tapes failed to meet the IRS requirements necessary to treat drywall as 5-year property for the monetary incentives.
In 2014, the IRS issued Private Letter Ruling PLR 110197-13 confirming the accelerated 5-year depreciation classification for removable walls installed with Green Zip® technology. Turner Construction then vetted the process in a cost savings case study done for British Petroleum. Awards given by the EPA and the AIA all further validate the product claims. Green Zip® simply combines innovative architecture with cost segregation accounting practices and is considered brilliant by those who understand both of these aspects.
WILL THIS INCREASE MY RISK OF BEING AUDITED BY THE IRS?
No, we have NEVER caused an audit. We have fortune 50 companies with full time IRS auditors that have used our product and supported the depreciation during their normal audit. We have also had companies pay to have a pre-file audit that was completely affirmed by the IRS and we have a pre-file letter ruling [ PLR 110197-13 ] that supports all of our claims. The IRS worked with the founder to give benefit to businesses to encourage the only environmentally sustainable solution for keeping drywall out of landfills. The IRS isn’t trying to stop us from doing this – they approved the design of the benefit.
ANY NATIONALLY RECOGNIZED ACCOUNTING FIRMS ENDORSE THIS?
Yes. In February of 2014, Price Waterhouse Coopers (PWC) highlighted the IRS accelerated depreciation classification ruling (regarding our patented technology) on their website and featured it in their monthly Accounting Methods Spotlight. That same year, in an article published in Bloomberg BNA Daily Tax Report, David Burton, a tax attorney and partner at Akin Gump Strauss Hauer & Feld, affirmed the IRS ruling. And, after a year long vetting process, RSM (formerly McGladrey) issued a ringing endorsement in 2015.
WHY DOES MY CPA THINK I SHOULDN’T USE THIS PRODUCT?
While CPA’s are great at what they do, there can still be some things that are outside of their areas of expertise. There may be some other reason, but we’ve often found that reclassification of assets through the use of our tape sometimes falls into an area that they don’t understand well enough to be comfortable defending (i.e. in an audit) if ever required to do so. Combine that with the fact that they may not want to bring in another accountant or competitor who does understand it well and you can get some initial hesitation or resistance. We have several accounting and cost segregation experts that will be happy to help your CPA come to a place of feeling comfortable with getting you these benefits.
SHOULD WE CONSIDER THIS CONSTRUCTION METHOD IF WE CAN’T USE THE DEPRECIATION RIGHT NOW?
Yes. The construction method creates a loss that can be carried forward for up to 5 years. There is great cash flow value in still getting the benefit earlier than you normally would even if you have to delay a year or two. It can also increase the sales value of the property.
CAN WE GET THE BENEFIT IF WE ARE PART OF A LIMITED PARTNERSHIP CREATED JUST FOR ONE PROJECT WHERE ALL PROFITS FLOW TO OTHER COMPANIES?
Yes, it is still just depreciation and the depreciation can follow the profits to lower taxable income, wherever the profits end up.
CAN WE STILL USE GREEN ZIP® IF WE HAVE PARTNERS ON A PROJECT THAT CAN’T USE THE DEPRECIATION?
Yes. This makes it more advantageous for you through a 704(b) special allocation, where the depreciation can be allocated to the parties that stand to benefit most from it.
CAN A MERCHANT BUILDER THAT WON’T MAKE ENOUGH INCOME OFF THE PROPERTY BEFORE SELLING STILL BENEFIT?
- The ability to create carry-forward losses
- The ability to pass losses up to a larger corporate sponsor with other sources of income
- The ability to transfer the benefit to the financial partners in the project
- The increased sale value
These can all eliminate the need for a property to generate enough income as the only way to justify – and benefit from – using Green Zip®.
DO YOU HAVE TO GIVE BACK DEPRECIATION BENEFITS (AS CAPITAL GAINS) WHEN YOU SELL THE PROPERTY?
Not necessarily. The ordinary income tax rate is higher than the long-term capital gains rate, thus creating benefit even after the sale by reducing income at a higher tax rate and recapturing it at a lower rate. Also, the construction method can provide an increased sales price of a building in that the new owner can also benefit from the moveable walls and the same accelerated depreciation and cash flow.
DOES IT COST US MORE IN DEPRECIATION RECAPTURE IF WE SELL THE PROPERTY BEFORE 5 YEARS?
Not necessarily. Accounting firm RSM (formerly McGladrey) explains ways to eliminate recapture on personal property that is reusable material by allocating the gains to “assets that are not subject to depreciation recapture, such as MACRS real property, non-depreciable property (land) or other intangibles.”
HOW DOES GREEN ZIP® AFFECT RESALE VALUE?
Buildings constructed with our technology can increase re-sale values and provide the seller with a competitive market advantage. The new owner will again be able to claim the total amount of the accelerated depreciation identified in the cost segregation study, including the demountable drywall partitions, recalculated against the property’s new purchase price.
WHO SHOULDN’T USE THIS PRODUCT?
Any business, such as a non-profit, that isn’t paying income taxes can’t benefit from the tax benefits provided by Green Zip®. However there are so many benefits in addition to the tax benefits that additional consideration should be made.
DOES GREEN ZIP® DRYWALL JOINT TAPE ADVERSELY AFFECT SOUND TRANSMISSION THROUGH A WALL?
Green Zip® drywall joint tape, like all other drywall joint tapes, does not change the STC (Sound Transmission Coefficient). However, the Structural Engineer’s framing layout can have a major impact on the STC. We discussed this with the structural engineer for Holiday Inn Express and he applauded the suggestion. He made sure he ran the joists from perimeter wall to corridor wall (not from separating wall—demising wall—to demising wall) for two reasons:
- The STC rating between rooms is increased because when the demising (separating) wall between rooms is not load bearing – and therefore the joists do not rest on top of the wall, it is easier to mitigate sound because the wall goes straight up to the deck without being interrupted with intersecting joists which are subject to sound transmission.
- This can also increase the Green Zip® tax benefit from about $5 per square foot of floor area to about $9. Further, the structural engineer made the header over the corridor-entry door an 8-foot long header (with a 3-foot wide door AND 5 feet of studs beneath the 8-foot header). This increased the Green Zip® tax benefit to about $12 per square foot of floor space.