Program Service Revenue 990 Form

I'm preparing a 990 tax return for a nonprofit, specifically, an American Legion. This organization primarily provides social activities for military veterans. They have a restaurant, bar, gaming and raffles. They raise money for the "boys state fund," but other than that, they donate funds to the American Legion Auxilliary. I'm stumped as to what constitutes the program service revenue for this organization. It seems to me that all of the revenue received for the restaurant, bar and gaming should be classified as program service revenue. However, if I look at other 990 returns filed for American Legion orgs in the US (on Guidestar), most of them don't list any program service revenue at all. If they have gaming it gets classified as other revenue along with sales of items (such as in a store or restaurant). When it comes to allocating the functional expenses to program services, however, they allocate most of the expense to that. How can you have program service expense and no program service revenue?

I'm beginning to wonder if anyone really knows how to file the 990 return properly for this type of organization. Or, maybe I'm just not understanding the terminology here. If anyone can assist me with this, I'd greatly appreciate it. Thanks!

I prepare tax 990EZ for two VFW's and they have the same types of income you described. We also report bar, restaurant, and gaming as program service revenue, and the raffles as gaming. To be honest, we do that because that's the way it was done for all the prior years. I never really questioned it as it doesn't really seem to matter at the IRS or state level. Perhaps it matters on their annual audits, but nobody has ever complained...

I think you're right in that the government doesn't scrutinize these types of returns much....the veterans organizations, I mean. Thanks for your reply.

It has been years, but restaurant income used to have an Unrelated Taxable Income to the extent of nonmember use. Records were kept to get the nonmember % and I think if % was low enough it could be ignored...

If all of the restaurant and bar sales are from members only, then does that income constitute program service revenue? It seems that the program or purpose of an American Legion is to provide social activities and entertainment to veterans. The bar and restaurant seem to serve that purpose.