Unincorporated Nonexempt Clubs


K

kcblanton

I'm trying to determine the Federal and California tax
requirements for unincorporated NONEXEMPT social/recreational
clubs. All I've been able to find are addresses for exempt
entities. Where should I look to find information on nonexempt
clubs?

Thanks!

Ken

Moderator:
Is this like the Motorcycle Gang paying taxes? <G>
 
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T

TaxmanHog

I'm trying to determine the Federal and California tax
requirements for unincorporated NONEXEMPT social/recreational
clubs. All I've been able to find are addresses for exempt
entities. Where should I look to find information on nonexempt
clubs?
Moderator:
Is this like the Motorcycle Gang paying taxes? <G>
Why wouldn't a MC not be in compliance, ever heard of H.O.G!

Which is not to say that all MC's are in full compliance ;-)

--
TaxmanHog - http://home.comcast.net/~taxmanhog/
EKIII page - http://eddiekieger.com
r.m.h FAQ - http://rmhfaq.com
r.m.h parking lot - http://rmhparkinglot.com/

04 VRSCA (V-Mod)
98 FXSTS
 
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A

A.G. Kalman

I'm trying to determine the Federal and California tax
requirements for unincorporated NONEXEMPT social/recreational
clubs. All I've been able to find are addresses for exempt
entities. Where should I look to find information on nonexempt
clubs?

Moderator:
Is this like the Motorcycle Gang paying taxes? <G>
I'm somewhat confused by your identification of this entity as a
unincorporated nonexempt club. Usually, social and recreational
clubs are nonprofit associations. If by nonexempt you mean this
is a for profit club of some kind, then you have a business
entity that is going to file annual tax returns. It sounds like
you have more than one owner, so if it is unincorporated it is a
partnership. Partnerships are pass-through entities that file an
annual tax return. The profit or loss is passed through to the
partners who report the income, expense, gains or losses on their
personal income tax returns.

In California, corporations, LLCs and limited partnerships
register with the Secretary of State. If they are not listed with
the Secretary than you will have to check with a California
County or City to see where they have their business license.
 
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M

MTW

I'm trying to determine the Federal and California tax
requirements for unincorporated NONEXEMPT social/recreational
clubs.
See IRC 277 which states in part:

"In the case of a social club or other membership organization
which is operated primarily to furnish services or goods to
members and which is not exempt from taxation, deductions for
the taxable year attributable to furnishing services, insurance,
goods, or other items of value to members shall be allowed only
to the extent of income derived during such year from members or
transactions with members (including income derived during such
year from institutes and trade shows which are primarily for the
education of members)."

MTW
 
S

Stuart A. Bronstein

I'm trying to determine the Federal and California tax
requirements for unincorporated NONEXEMPT social/recreational
clubs. All I've been able to find are addresses for exempt
entities. Where should I look to find information on nonexempt
clubs?
See IRS Form 1024,
http://www.irs.gov/pub/irs-pdf/k1024.pdf

California requirements are the same, but I forget the form number at
the moment
Moderator:
Is this like the Motorcycle Gang paying taxes? <G>
See section 501(c)(7) or 501(c)(10).

Stu
 
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C

cballard

I'm trying to determine the Federal and California tax
requirements for unincorporated NONEXEMPT social/recreational
clubs. All I've been able to find are addresses for exempt
entities. Where should I look to find information on nonexempt
clubs?
The default federal classification for any nonexempt
unincorporated association is as a partnership, and
therefore your association would be required to file
Form 1065 and issue K-1s to all of the members of the
association if there is any taxable income. See Reg
301.7701-3. You could change the default classification
and instead be treated as a corporation by filing Form
8832 with the IRS.

I don't know what the rules would be under California law.

If you are a social/recreational club, are you sure that
you aren't exempt under 501(c)(7)? An organization can
be exempt under 501(c)(7) without going through the
official application process.

--Chris Ballard
 
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K

kcblanton

Uhm ... no. We're a sea kayaking club located in
California that is unincorporated, nonprofit and
has not filed for tax exemption. Our only revenue
is from dues and what little is left at the end
of the year is rolled over to the next year. We
conduct no business activities.

Ken
 
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C

cballard

Uhm ... no. We're a sea kayaking club located in
California that is unincorporated, nonprofit and
has not filed for tax exemption. Our only revenue
is from dues and what little is left at the end
of the year is rolled over to the next year. We
conduct no business activities.
It sounds like you are a 501(c)(7) social club, exempt from
tax. This type of organization can be exempt from tax even
if it doesn't formally apply for a tax exemption. (You may
want to apply for exemption anyway...the determination
letter you get from the IRS makes things a whole lot simpler
when your organization is dealing with third parties).
Here's a quote from section 7.25.1.1 of the Internal Revenue
Manual:

"The Service will recognize qualified organizations as
exempt from federal income tax in response to requests
submitted by the organizations. Except for most
organizations described in paragraphs (3), (9), or (17) of
section 501(c), the Internal Revenue Code does not require
organizations to apply for recognition of exemption. An
organization qualifies for exemption if it meets the
requirements of the Code. However, an organization is
subject to tax until it establishes that it qualifies for
exemption, and most organizations find that filing an
application for recognition of exemption is the least
burdensome way to establish that they qualify."

If your organization is exempt and usually has less than
$25,000 of revenue per year, there is generally no annual
filing requirement with the IRS (unless you have some sort
of unrelated business income). Above that level, your
organization would have to file a Form 990 each year.

The California rules could be different. I don't have any
experience with California exempt organizations.

--Chris Ballard
 
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K

kcblanton

Form 1024 and associated documents that I've read talk about
how to get an exemption and what to do once it's received
.... not what to do if your not exempt. That's my question.

Ken
 
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K

kcblanton

I identified us as nonprofit because our only income is from
member dues. We have no unrelated business income. Club
expenses are paid from club dues and remaindered dues are
rolled over into the next year. All expenses are associated
to our club's purpose.

I identified us as nonexempt because we've never requested
exemption.

We aren't incorporated.

My understanding is that until we apply for and receive
exempt status, we are considered a nonexempt corporation.

Ken
 
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K

kcblanton

My understanding is that by default, our club is considered
nonexempt until it formaly applies for and receives
exemption. That's what the IRS publications say and that's
what the IRS help line folk have said. How can the
application process be avoided and what document talks
about it?

BTW, we only take in about $2300 a year (from dues) and all
but $500 or so goes to related club expenses and the
remainder is rolled over for use next year.

Ken
 
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