The prerequisite of an exemption for a social club under Section 501(c)(7) is the providing of pleasure or recreation to its members. In order to qualify for an exemption, substantially all of the social club’s activities must further the club’s recreational and social purposes. They must also meet both the organizational test and the operational test. In other words, the club must be both organized for the tax-exempt purpose of providing pleasure, recreation, or other permissible purposes, and it must operate on a not-for-profit basis. Examples of these types of clubs include golf clubs, tennis clubs, country clubs, dinner clubs, and swimming clubs.
Tuesday, May 1, 2012
Social and recreational clubs
501(c)(7): Social and recreational clubs: Everyone needs to have fun. So Congress decided that social and recreational clubs are organizations that operate for the public good and are therefore worthy of exemptions. Congress recognized that individuals who band together to provide recreational facilities on a mutual basis aren’t attempting to profit from having their members use of the facilities. This recognition helped Congress decide to give these organizations tax-exempt status.
The prerequisite of an exemption for a social club under Section 501(c)(7) is the providing of pleasure or recreation to its members. In order to qualify for an exemption, substantially all of the social club’s activities must further the club’s recreational and social purposes. They must also meet both the organizational test and the operational test. In other words, the club must be both organized for the tax-exempt purpose of providing pleasure, recreation, or other permissible purposes, and it must operate on a not-for-profit basis. Examples of these types of clubs include golf clubs, tennis clubs, country clubs, dinner clubs, and swimming clubs.
The prerequisite of an exemption for a social club under Section 501(c)(7) is the providing of pleasure or recreation to its members. In order to qualify for an exemption, substantially all of the social club’s activities must further the club’s recreational and social purposes. They must also meet both the organizational test and the operational test. In other words, the club must be both organized for the tax-exempt purpose of providing pleasure, recreation, or other permissible purposes, and it must operate on a not-for-profit basis. Examples of these types of clubs include golf clubs, tennis clubs, country clubs, dinner clubs, and swimming clubs.
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