[Code of Federal Regulations]
[Title 26, Volume 7]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.501(c)(7)-1]

[Page 19]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.501(c)(7)-1  Social clubs.

    (a) The exemption provided by section 501(a) for organizations 
described in section 501(c)(7) applies only to clubs which are organized 
and operated exclusively for pleasure, recreation, and other 
nonprofitable purposes, but does not apply to any club if any part of 
its net earnings inures to the benefit of any private shareholder. In 
general, this exemption extends to social and recreation clubs which are 
supported solely by membership fees, dues, and assessments. However, a 
club otherwise entitled to exemption will not be disqualified because it 
raises revenue from members through the use of club facilities or in 
connection with club activities.
    (b) A club which engages in business, such as making its social and 
recreational facilities available to the general public or by selling 
real estate, timber, or other products, is not organized and operated 
exclusively for pleasure, recreation, and other nonprofitable purposes, 
and is not exempt under section 501(a). Solicitation by advertisement or 
otherwise for public patronage of its facilities is prima facie evidence 
that the club is engaging in business and is not being operated 
exclusively for pleasure, recreation, or social purposes. However, an 
incidental sale of property will not deprive a club of its exemption.