Private country club earning $1.2 million in profits is tax-exempt

The Carolina Country Club is one of themost prestigious clubs in Raleigh, North Carolina. The club has been around forover 100 years and membership to join is by invitation only. While the CarolinaCountry Club’s most recent tax forms shows it generated nearly $13 million fromdues and other resources, the club’s nonprofit status insulates it from payingcorporate income tax.

The Internal Revenue Service tax codeallows social clubs, including those that charge members thousands of dollarsto join such as Carolina Country Club, to apply for tax-exempt status.  Unlike traditional nonprofits, such aschurches or charities, country clubs are not required to have a charitablepurpose. However, the clubs still have to pay property and sales tax and tax oninvestment and nonmember income. Moreover, nonprofit status for organizationslike Carolina Country Club imposes restrictions on advertising, paying dividends,and bookkeeping privacy.  The realbenefit these clubs receive is avoiding the corporate income tax.

http://www.wral.com/wral-investigates-private-country-clubs-can-claim-nonprofit-status/12068405/

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