Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 60-11

1960-1 C.B. 518

Section 6011 -- Return Filing Requirement

Caution: Obsoleted by Rev. Rul. 69-227

IRS Headnote

The exemption from the excise tax on club dues provided by section 4243(c) of the Internal Revenue Code of 1954, as added by the Excise Tax Technical Changes Act of 1958, Public Law 85-859, with respect to dues paid by members of a club organized primarily for the purpose of providing swimming facilities to its members, does not apply if such club also provides facilities for dancing.

Full Text

Rev. Rul. 60-11

Advice has been requested whether, under the circumstances described below, dues or membership fees paid by members of a club operated primarily for the purpose of providing swimming facilities for its members are exempted from the excise tax on club dues by section 4243(c) of the Internal Revenue Code of 1954, as added by the Excise Tax Technical Changes Act of 1958, Public Law 85-859, C.B. 1958-3, 92.

A nonprofit club operates facilities on its premises consisting of a swimming pool, parking lot, sun area, and a building which is used for club meetings, parties, and dancing. The building is used for dancing less than ten times a year, and the music for such dancing is provided by a record player. Membership in the club is composed of families, and each family pays $65 per year as dues.

Section 4241(a)(1) of the Code imposes a tax on any amount paid as dues or membership fees to any social, athletic, or sporting club or organization, if the dues or fees of an active resident annual member are in excess of ten dollars per year. However, section 4243(c) of the Code, which applies to amounts paid on or after January 1, 1958, exempts from this tax all amounts paid as dues or fees to any club or other organization organized and operated primarily for the purpose of providing swimming or skating facilities for its members, if no part of the net earnings of such organization inures to the benefit of any private stockholder or individual. This exemption applies only if four enumerated conditions are established to the satisfaction of the Secretary of the Treasury or his delegate, including the condition under subsection (3) of section 4243(c) of the Code that no dining facilities (other than facilities for light refreshment) and no dancing facilities will be provided on any premises under the control of such organization.

The organization in the instant case is being operated primarily for the purpose of providing swimming facilities for its members within the purview of section 4243(c) of the Code. However, since the organization provides facilities for dancing, although such dancing is infrequent and informal, it is held that the exemption provided by section 4243(c) of the Code does not apply. Therefore, dues or membership fees paid by members of the club are subject to the excise tax on club dues.