Court case · 1985
Mallinckrodt, Inc. v. Commissioner
778 F.2d 402 (8th Cir. 1985), aff'g T.C. Memo 1984-532
U.S. Court of Appeals, 8th Circuit
IRS won
The facts
Mallinckrodt claimed the investment credit on non-load-bearing gypsum drywall partitions at some of its locations. The partitions ran from the floor up to the height of a false ceiling.
What the court decided
The Eighth Circuit affirmed the Tax Court: the gypsum drywall partitions were structural components of the building, section 1250 real property, not tangible personal property eligible for the investment credit.
Why it matters for your study: The counterweight to Metro National on partitions. Whether a partition is short-life turns on movability in fact: drywall built in place generally stays with the building, while truly demountable partition systems can qualify.
Parts the case looked at
- gypsum drywall partitions
Background
Mallinckrodt, a manufacturer, claimed the investment credit on interior partitions at some of its locations. The partitions were gypsum drywall, non-load-bearing, running from the floor up to the height of a false ceiling.
The question was whether those partitions were tangible personal property eligible for the credit or structural components of the building. The Tax Court said structural components in T.C. Memo 1984-532, and Mallinckrodt appealed.
What it established
The Eighth Circuit affirmed on November 4, 1985. The drywall partitions were structural components, section 1250 real property, even though they carried no load and stopped at a false ceiling.
The lasting lesson is that movability in fact controls. Drywall is built in place with studs, taped joints, and finish. Taking it down means demolition, not relocation. The IRS Pub 5653 matrix presents the contrast pair directly: Mallinckrodt drywall partitions are 1250, while Metro National's gypsum partitions, on facts showing real demountability, were 1245.
How it shows up in a study
Every office and industrial study faces partition calls, and this case sets the default: conventional drywall partitions stay at 39 years. A study that reclassifies standard drywall is taking a position this case rejects.
The favorable claim is reserved for true demountable partition systems: manufactured panels designed to be unbolted, moved, and reused, often with a history of actually being moved. When a study claims those, Appendix A cites the Metro National side of the pair and distinguishes Mallinckrodt on the facts.
What it does not mean
Mallinckrodt does not mean no partition can ever be short-life property. The same IRS guide that records this loss also records Metro National's win on demountable partitions. The line is drawn by how the partition is built and whether it can really move.
It also means labels do not win cases. Calling drywall non-load-bearing, or pointing out that it stops at a drop ceiling, did not change the result here. The physical facts of construction and removal are what count.
Primary source
Read the official text for yourself, or share it with your advisor.
- Category
- Asset classification
- Outcome
- IRS won
- Applies to
- Industrial, Office, Manufacturing
- Status
- Vetted
This page explains a tax authority in plain words. It is not tax advice for your situation. The way this authority applies to your property is reviewed by a licensed tax professional. Citation is provided so you or your advisor can read the primary source.