Welcome to Law-Forums.org!   

Advertisments:




Sponsor Links:

Discount Legal Forms
Discounted Legal Texts


Social Club And Timber Sales

Discuss anything to do with property law - buying, selling property

Social Club And Timber Sales

Postby otis » Fri Nov 25, 2016 4:42 am

I belong to a 501 non-profit MC club in Pa.,we recently sold lumber from the clubs property. We plan on using the money from the lumber to improve the club grounds.I was wondering if we had to report the income from the lumber we received? And if there was a cap on the amount of money we could have in our club account..? And also if there is laws on how we could use these funds?

ANSWER: IRS Publication 598 "Tax on Unrelated Business Income of Exempt

Organizations" at

www.irs.gov/pub/irs-pdf/p598.pdf

explains that,  if such products are not directly related to the

exempt purpose or function constituting the basis for its exemption(other than for

production of income), then the sales activities are generally

taxable.

However, on page 6 you will see an exception when substantially all the

work is performed for the organization without compensation.

Let me know if this exception applies in your situation. Also, it appears that you are referring to a 501(c)(7) recreational or social organization

about which the IRS writes at www.irs.gov/irm/part7/irm_07-025-007.html If not, I would need to know the subsection of IRC 501(c) under

which the organization was incorporated and received its exemption determination from

the IRS. After you reply I will respond again. See IRS Publication 557 "Tax Exempt

Status for Your Organization" www.irs.gov/pub/irs-pdf/p557.pdf [pdf] starting on

page 65 as to the different types of 501(c) organizations. The designation will be on your exemption letter from the IRS.

Harvey Mechanic, Attorney at Law

[email protected]

---------- FOLLOW-UP ----------

Yes I believe we are an 501(C)(7) we are a MC club with only 30 members, we pay no salaries and no member holds a payed position. Our club property was timbered for the sole purpose to receive income, so that we could spend the income on improving our club property.

We also have small events at the club to provide income to pay expenses of the club. All monies made at club events as well as member dews are spent on maintaining our club. I did read somewhere in the IRS booklet that you refereed to, about timber, but i didn't quit understand the meaning...? and if at all we are eligible..?

Thank You
otis
 
Posts: 50
Joined: Thu Mar 31, 2011 11:49 pm

Social Club And Timber Sales

Postby Fitzwilliam » Sat Nov 26, 2016 5:16 am

I belong to a 501 non-profit MC club in Pa.,we recently sold lumber from the clubs property. We plan on using the money from the lumber to improve the club grounds.I was wondering if we had to report the income from the lumber we received? And if there was a cap on the amount of money we could have in our club account..? And also if there is laws on how we could use these funds?

ANSWER: IRS Publication 598 "Tax on Unrelated Business Income of Exempt

Organizations" at

www.irs.gov/pub/irs-pdf/p598.pdf

explains that,  if such products are not directly related to the

exempt purpose or function constituting the basis for its exemption(other than for

production of income), then the sales activities are generally

taxable.

However, on page 6 you will see an exception when substantially all the

work is performed for the organization without compensation.

Let me know if this exception applies in your situation. Also, it appears that you are referring to a 501(c)(7) recreational or social organization

about which the IRS writes at www.irs.gov/irm/part7/irm_07-025-007.html If not, I would need to know the subsection of IRC 501(c) under

which the organization was incorporated and received its exemption determination from

the IRS. After you reply I will respond again. See IRS Publication 557 "Tax Exempt

Status for Your Organization" www.irs.gov/pub/irs-pdf/p557.pdf [pdf] starting on

page 65 as to the different types of 501(c) organizations. The designation will be on your exemption letter from the IRS.

Harvey Mechanic, Attorney at Law

[email protected]

---------- FOLLOW-UP ----------

Yes I believe we are an 501(C)(7) we are a MC club with only 30 members, we pay no salaries and no member holds a payed position. Our club property was timbered for the sole purpose to receive income, so that we could spend the income on improving our club property.

We also have small events at the club to provide income to pay expenses of the club. All monies made at club events as well as member dews are spent on maintaining our club. I did read somewhere in the IRS booklet that you refereed to, about timber, but i didn't quit understand the meaning...? and if at all we are eligible..?

Thank You
Fitzwilliam
 
Posts: 60
Joined: Mon Jan 20, 2014 11:42 pm

Social Club And Timber Sales

Postby Darwin » Mon Dec 05, 2016 6:23 pm

I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations. However, I will point out to you 26 U.S.C. 1.501(c)(7) - 1 - about "Social clubs" which has at subsection(b) "A club which engages in business, such as making its social and recreational facilities available to the general public or by selling real estate, timber, or other products, is not organized and operated exclusively for pleasure, recreation, and other nonprofitable purposes, and is not exempt under section 501(a)[which includes the 501(c)(7).http://cfr.vlex.com/vid/1-501-7-social-clubs-19703314

Therefore, your timber sales may jeopardize your exemption. You definitely would want to review your exemption letter to confirm that yours is a(c)(7).  As for how your one time sale would apply, if at all, I would be willing to work on your matter, but I would need to spend a substantial amount of time checking IRS case and that would be beyond the scope of this free forum. If you want to hire me for such work, please contact me directly to the email address below.  If you want to continue the operation, we may be able to spin it off or make the organization fit under another subsection of the 501(a) as an exempt organization. Harvey Mechanic, Attorney at Law - [email protected]
Darwin
 
Posts: 40
Joined: Tue Jan 21, 2014 8:10 am


Return to Property Law

 


  • Related topics
    Replies
    Views
    Last post