The Law of Tax-Exempt Organizations, 2021 Cumulative Supplement. Bruce R. Hopkins

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