target="_blank" rel="nofollow" href="#ulink_0e789ea0-3ad4-5e29-bba6-632fcf3666cc">199.1 E.g., Priv. Ltr. Rul. 201511024.12 199.2 Priv. Ltr. Rul. 201820020.
13 199.3 Priv. Ltr. Rul. 201924019.
14 199.4 Priv. Ltr. Rul. 201931010.
15 217.1 See § 20.13(a).
16 217.2 See § 20.3.
17 217.3 See § 14.2(c)(i), (ii).
18 217.4 Priv. Ltr. Rul. 201931013.
CHAPTER FIFTEEN Social Clubs
§ 15.1 Social Clubs in General (b) Club Functions
§ 15.4 Exceptions to Limitations
§ 15.5 Taxation of Social Clubs
§ 15.1 SOCIAL CLUBS IN GENERAL
(b) Club Functions
p. 365, carryover paragraph. Insert as last sentences:
As still other examples, a membership organization of football officials functioning in public school districts was denied recognition of tax exemption in part because of lack of “social commingling or fellowship” among its members; the only gatherings were training sessions, which were not mandatory.15.1 The same held for a membership entity whose members met weekly to make decisions and take advantage of opportunities within its local business region.15.2
p. 366, note 31. Insert following existing text:
A nonprofit organization that merely leases property to a tax‐exempt fraternity or sorority cannot qualify for exemption (e.g., Priv. Ltr. Rul. 201927023).
§ 15.4 EXCEPTIONS TO LIMITATIONS
p. 372, second complete paragraph. Insert as last sentence:
In another instance, the IRS ruled that income from the sale of emission credits will not disturb a social club's tax exemption because the sale will be a new source of income for the club and the sale activity will be a nonrecurring event.93.1
§ 15.5 TAXATION OF SOCIAL CLUBS
p. 376, second complete paragraph, second and third sentences. Delete and insert:
This decision was affirmed; as to the factual issue of whether the club demonstrated a profit motive, the court of appeals conceded that “demonstrating profit motive without profitability proves difficult.”120.1 Entities in this position, the appellate court continued, “generally must show that their intent to profit was thwarted somehow.”120.2 It added: “When an organization is consistently unprofitable, even tougher.”120.3 The court then stated this telltale observation: “Although courts review holistically all relevant facts and circumstances when deciding whether an activity is a business or hobby, a long history of consistent and unexplained losses can overwhelm all other factors.”120.4 This club, the appellate court concluded, “never adduced any evidence that it attempted to stem its flood of losses, or that it expected to eventually profit.”120.5
Notes
1 15.1 Priv. Ltr. Rul. 201845030.
2 15.2 Priv. Ltr. Rul. 201848017.
3 93.1 Priv. Ltr. Rul. 202019027.
4 120.1 Losantiville Country Club v. Comm'r, 906 F.3d 468, 474 (6th Cir. 2018).
5 120.2 Id.
6 120.3 Id.
7 120.4 Id.
8 120.5 Id.
CHAPTER SIXTEEN Labor, Agricultural, and Horticultural Organizations
§ 16.2 Agricultural Organizations
§ 16.2 AGRICULTURAL ORGANIZATIONS
p. 386, first paragraph, last line. Insert footnote at end of line:
56.1 Applying this definition of the term agricultural, the IRS denied recognition of exemption to an organization that educates the public as to the values and benefits of the horse and greyhound racing industries to its state's economy and the benefits of permitting electronic gaming alongside pari‐mutuel betting at racing facilities (Priv. Ltr. Rul. 201905005).
p. 388, carryover paragraph. Insert as last sentence:
By reason of this rationale, organizations operating farmers' markets cannot qualify as tax‐exempt agricultural entities.76.1
