501(c)(7) Tax-Exempt Social Club Organizations: Mastering Tax and Operational Requirements

Reporting Nonmember and Nontraditional Income, Keeping Within Safe Harbor, and Defending IRS Exemption Challenges

Note: CLE credit is not offered on this program

A live 110-minute CPE video webinar with interactive Q&A


Tuesday, November 16, 2021

1:00pm-2:50pm EST, 10:00am-11:50am PST

or call 1-800-926-7926

This course will give a detailed overview of the accounting and operational requirements of an IRC 501(c)(7) social club organization. The panel will offer concrete illustrations of nonmember and nontraditional income, review the safe harbors for unrelated income, and guide tax advisors on responding to IRS challenges to exempt status.

Description

Social club organizations organized under IRC Section 501(c)(7) serve a useful exempt purpose in allowing groups organized without a profit motive to avoid paying tax on revenue from membership dues and other member sources.

The principal areas of concern concerning IRC 501(c)(7) organizations are excess nonmember income and nontraditional income. The IRC specifies that social clubs claiming an exempt purpose must derive their operating support primarily from member dues, fees, and assessments. The IRS has established safe harbor amounts for nonmember income that an IRC 501(c)(7) organization may receive. Exceeding safe harbor percentages for nonmember income, social clubs jeopardize their exempt status.

The prohibition against nonmember income extends to nontraditional income, which the IRS defines as income from activities that, if conducted with members, would not further the club's tax-exempt purposes. Advisers to IRC 501(c)(7) organizations must ensure the club does not derive excess nontraditional income to avoid unnecessary tax consequences.

Listen as our experienced panel provides a detailed and practical exploration into the operating and tax tasks and requirements of operating an IRC 501(c)(7) organization.

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Outline

  1. Organizing principles of IRC 501(c)(7)
  2. Transactions and events that can trigger UBTI or loss of exempt status (including excess nonmember income, advertising for nonmember use of facilities, nontraditional income, reciprocal income)
  3. Use of subsidiaries
  4. How to defend a challenge to exempt status
  5. How the new SILO rules affect UBTI calculations
  6. Certain tax differences between tax-exempt clubs and taxable clubs (diverse treatment of capital assessments and initiation fees and insurance proceeds)
  7. Filing requirements, Forms 990 and 99EZ

Benefits

The panel will discuss these and other important issues:

  • What are the nonmember and nonrelated income definitions and thresholds for IRC 501(c)(7) organizations?
  • How do UBTI and other nonmember income impact the exempt status of a social club?
  • How do the new SILO rules affect UBTI calculations?
  • What documentation is essential for defending against an IRS challenge to tax-exempt status?
  • Certain tax differences between tax-exempt clubs and taxable clubs

Faculty

Gilson, James
James W. Gilson, CPA

Partner
Condon O'Meara McGinty & Donnelly

Mr. Gilson is a member of the American Institute of Certified Public Accountants (AICPA), the AICAP Not-for-Profit...  |  Read More

Lazzaruolo, Alexander
Alexander (Alex) Lazzaruolo, CPA, Esq.

Partner
Condon O'Meara McGinty & Donnelly

Mr. Lazzaruolo has over 15 years' experience in the nonprofit sector and serves on the Nonprofit Organizations...  |  Read More

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