Rev. Rul. 60-108

Advice has been requested whether the tax on club dues applies to amounts paid to a `hunt' club by its members for the hire of horses, the rental of horse stalls, and the boarding of horses for its members.

A `hunt' club provides facilities for its members that include tennis courts, a swimming pool, horse show ring, extensive stables, a riding area for schooling and jumping purposes, and a large club house with a dining room, a kitchen, and a bar. The club owns, maintains, and rents riding horses to members at an hourly or daily rate, and provides stabling, feeding, and care for horses belonging to club members for a monthly charge. In addition, the club rents a half-barn, one section containing eight stalls and the other seven, to each of two members for a monthly charge. Although all members and guests can avail themselves of the riding facilities, including riding ring and grounds, the use of the facilities is optional and only a few members utilize them. No mandatory minimum charge is made against the club members for the use of such facilities.

Section 4241(a) of the Internal Revenue Code of 1954 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. Section 4242(a) of the Code defines the term `dues' to include any assessment, irrespective of the purpose for which made, and any charges for social privileges or facilities, or for golf, tennis, polo, swimming, or other athletic or sporting privileges or facilities, for any period of more than six days.

Revenue Ruling 55-318, C.B. 1955-1, 509, holds that any charge made by a social, athletic, or sporting club or organization to any of its members for the use of any social, athletic, or sporting privilege or facility, for a period of more than six days, irrespective of whether the members have the option to decide whether they will avail themselves of such privilege or facility, comes within the meaning of the term `dues.'

Revenue Ruling 56-620, C.B. 1956-2, 834, holds that the term `athletic or sporting privilege or facility' includes the service of cleaning and storage of golf clubs and that payments made by members to a golf club for such service are subject to the tax on club dues.

Revenue Ruling 58-459, C.B. 1958-2, 822, holds that charges made by a yacht club to its members for the use of boat docking and mooring facilities for a period of more than six days constitute `dues' within the meaning of section 4242(a) of the Code and that payments of such charges are subject to the tax on club dues.

A charge made to members of a club for the rental of a horse stall is comparable to a charge made to members of a club for the mooring or docking of a boat. Likewise, the service of boarding and caring for a horse for riding purposes is comparable to the service of cleaning and storing golf clubs for the game of golf in that both services are functionally the care and maintenance of sporting facilities.

Accordingly, it is held that charges made by a hunt club to its members for the rental of horse stalls or for the boarding of horses constitute charges for athletic or sporting facilities within the meaning of section 4242(a) of the Code. Therefore, in the instant case, amounts paid by the members to the hunt club for the rental of horse stalls and for the boarding of horses for a period of more than six days are subject to the tax on club dues imposed by section 4241(a) of the Code.

It is further held that a charge made by the hunt club to its members for the hire of riding horses is a charge for an athletic or sporting privilege within the meaning of section 4242(a) of the Code. However, the tax on club dues does not apply unless the charge entitles the member to riding privileges for a period of more than six days. Accordingly, amounts paid by the members for the rental of horses by the hour or by the day are not subject to the tax.