What is a 501 (c) 7 SOCIAL CLUB?

SOCIAL CLUB – IRC 501(c)(7)

by Jim Langley and Conrad Rosenberg

1. Introduction
Social clubs are exempt from federal income tax under IRC 501(a) as
organizations described in IRC 501(c)(7) if they are

“organized for pleasure, recreation, and other nonprofitable purposes.”

They were originally granted exemption from federal income tax in the Revenue Act of 1916.

Generally, social clubs are membership organizations primarily supported by dues, fees, charges or other funds paid by their members.


7.25.7 Social and Recreational Clubs (02-23-1999)


  1. IRC 501(c)(7) exempts from federal income tax, clubs \”organized for pleasure, recreation, and other nonprofitable purposes, substantially all of the activities of which are for such purposes and no part of the net earnings of which inures to the benefit of any private shareholder.\”
  2. Social clubs are membership organizations.
    1. The exemption of social clubs is based on the logic of allowing members to pool their funds for recreational purposes, rather than for a compelling public benefit.
    2. IRC 501(c)(7) was amended by P.L. 94–568, 1976–2 C.B. 596. Prior to the amendment, IRC 501(c)(7) provided that clubs needed to be organized and operated exclusively for pleasure, recreation and other nonprofitable purposes. A club could only receive investment income or nonmember income if the income was incidental, trivial or nonrecurrent to its tax exempt purpose.
    3. The effect of IRC 501(c)(7) being changed to provide that \”substantially all\” of a club’s activities must be for recreational purposes is to allow social clubs to receive some investment income and income from nonmember use of its club facilities without jeopardizing its tax exempt status.
    4. Support received by members is not taxed, but any other income such as nonmember payments and passive income is taxed under IRC 512(a)(3). See discussion on section 512(a)(3) in IRM 7.27.7. Some familiarity with IRC 512(a)(3) is helpful in understanding the tax status of social clubs because exemption operates properly only if passive sources of income are taxed to the organization as unrelated business taxable income.
  3. Organizations which may be described in IRC 501(c)(7) include, but are not limited to:
    • College fraternities (See Rev. Rul. 69–573, 1969–2 C.B. 125, and Rev. Rul. 64–118, 1964–1 C.B. 182).
    • Country clubs
    • Amateur hunting, fishing, tennis, swimming and other sport clubs.
    • Dinner clubs which provide a meeting place, library, and dining room for members.
    • Variety clubs
    • Hobby clubs (See Rev. Rul. 66–179, 1966–1 C.B. 139).
    • Community associations (See Rev. Rul. 69–281, 1969–1 C.B. 155, and Rev. Rul. 80–63, 1980–1 C.B. 116).

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