Fall 2011 issue of Horizons

“Parties Of More Than 8” Is your club’s documentation up to snuff? On audit, the IRS will ask for copies of your documentation related to member and nonmember income. A host-guest relationship is assumed for parties of 8 or fewer and will be recorded as member income if at least one of the individuals is a member. A host-guest relationship is also assumed for groups where 75 percent or more of the group are members. While the documentation described below does not need to be maintained for parties of 8 or fewer or groups where 75 percent or more of the group are members, the club must maintain adequate records to substantiate that the groups had the adequate number of members present and the payment was received by the club directly from members or their employers.

4. Total charges 5. Charges attributable to nonmembers 6. Charges paid by nonmembers 7. Statement signed by the member indicating: a. Whether he/she has been or will be reimbursed for such nonmember use and, if so, the amount of the reimbursements; or, b. The name of his/her employer, the amount of the payment attributable to the nonmember use, the nonmember’s name and business or other relationship to the member and the business, personal or social purpose of the member served by the nonmember use; or, c. The donor’s name and relationship to the member. Ensure your club is keeping adequate documentation regarding parties of more than 8 or the IRS could determine all income is nonmember and subject to unrelated business income tax.

Documentation must contain the: 1. Date 2. Total number in the party 3. Number of nonmembers in the party

RubinBrown’s Hospitality & Gaming Services Group Many hotels, country clubs, retailers and gaming operations seek out RubinBrown’s accounting, consulting, and tax services.

Chelle Adams, CPA - St. Louis Partner-In-Charge Hospitality & Gaming Services Group chelle.adams@rubinbrown.com 314.290.3329

Todd Pleimann, CPA - Kansas City Managing Partner, Kansas City Office todd.pleimann@rubinbrown.com 913.499.4411

Meyer Saltzman, CPA, CFF, DABFA - Denver Partner

Jeff Sackman, CPA - St. Louis Vice Chair Hospitality & Gaming Services Group jeff.sackman@rubinbrown.com 314.290.3406

Hospitality & Gaming Services Group meyer.saltzman@rubinbrown.com 303.698.1883

www.rubinbrown.com

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