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Team McLube


The Publisher

Mar 6, 2013, 9:47 AM

Post #1 of 2 (15984 views)

By Glenn McCarthy
Members Only. It sounds exclusive; it conveys a message where commoners who wish to climb the ladder of success can become part of this exclusive group. Otherwise, commoners are to stay away - that's the message at least. But is there something else underlying that binds a yacht club to Members Only? Oh-yes there is, in the case of tax-exempt yacht clubs.

Most yacht clubs are tax-exempt corporations in the U.S. and many of them--from coast to coast--sit on public land on long-term leases. They have long-term leases on the land from a local government authority and p art of that agreement is that they remain a not-for-profit corporation. If or when a yacht club violates the agreement, most likely, they'll be removed from the land. How hard can it be to remain a tax-exempt organization?

In today's economic climate, yacht clubs are searching for new revenue sources, hosting seminars, relaxing rules to let non-members eat or drink at certain times, open public days, bringing in weddings, flea market s, and more. While these revenue enhancements sound simple, they must be accounted for separately in the yacht club's tax return.

What does the IRS say about this?

A yacht club receives its tax-exempt status under IRC 501(c)(7) as a social club, which is created for the purpose to bring members together to share facilities, socialize, and for camaraderie. Think about it. A yacht club is on an expensive piece of waterfront real estate and if it opens its doors to the public, not paying taxes, how does that compete with a for-profit corporation? The IRS figured this out long ago and made it so non-member revenue is subject to for-profit taxation. As a result, the IRS limits non-member income of 501(c)(7)'s in order to avoid unfair competition. -- Read on:

The Publisher

Mar 6, 2013, 9:48 AM

Post #2 of 2 (15970 views)
Re: [The Publisher] ANOTHER REASON TO HAVE FUN AT YOUR CLUB [In reply to] Log-In to Post/Reply

From Derek K Bouwer:
In reply to "Another Reason to Have Fun at Your Club", this is a point really dear to my heart as Club is a club because like-minded individual have come together in pursuit of their chosen sport and form a club. It is thus "Dao Facto" an exclusive organization funded and run by its very membership.

I understand that in the present economic climate, clubs are struggling to keep afloat. But does this mean we must open the club to the public because they might be offended if they felt excluded? Why do they not then take up that sport and join?

My club suffered a devastating fire in 2006; we lost membership of those not committed to the rebuilding of the club facilities. Then the club was opened to the public in a vain attempt to raise revenue. Then the membership fees were lowered to attract more members. How have we fared? Not so good

1) I now cannot get a seat on the deck of my club although have handed over the equivalent of 1500.00 dollars of my hard earned cash in rebuild fees etc! After sailing, with the deck is full of non-member, a few die hard club members raised money and bought a members-only table and enforce that rule at that table.

2) New members have not flocked in because of lowered subscriptions. They argue "why should they pay when they can drink and get in for nothing", which is the exact argument they used when they said it was too expensive and did not want to pay the elevated subscription fees!

3) There is now a members-only bar operational part time down stairs. I refuse to drink there as I believe we have given away the penthouse and are now drinking in the basement while the non-members enjoy the view from the deck.

My rules are quite simple - there should be limited public access and sailing activities to encourage membership, but if you want to share in the mystique of sailing you have to pay for the privilege and that means becoming a member and paying your dues. If that makes me exclusive then so be it!

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