Fall 2011 issue of Horizons

Hospitality & Gaming

Four Key Questions for Country Club Executives By Jeff Sackman, CPA

RubinBrown’s experts in the Hospitality and Gaming Industry Services Group have compiled critical questions that management members working for country clubs need to be asking themselves.

of visitors of other clubs was left out, and the “general public” was defined as persons other than members of a club or their dependents and guests. This silence left the classification of reciprocal agreements open to interpretation. The Internal Revenue Service (IRS) seems to have addressed this omission in Revenue Ruling 79-145 , which advises that amounts paid to a social club by visiting members of another social club are amounts paid by nonmembers, even though both clubs are of like nature and the amounts paid are for goods, facilities, or services provided by such social club under a reciprocal arrangement with such other social club. Regardless of the formal or informal nature of the arrangement, the IRS’ interpretation states that income received from a person that is not

Reciprocity Does your tax-exempt club account for income from reciprocal agreements as nonmember income?

Prior to Revenue Procedure (“Rev. Proc.”) 71-17, Rev. Proc. 64-36 provided for reciprocal use of club facilities, stating the term “guests” includes visiting members of exempt clubs of like nature who use club facilities under reciprocal agreements. When Rev. Proc. 71-17 was published, superseding Rev. Proc. 64-36 , many of the same principles were adopted, but not all. Specifically, mention

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