990 Help - Exempt income or UBTI?

A Section 501(c)(8) fraternal organization owns a lodge that also holds a dining hall & bar. The dining hall & bar are used for both member social/special events and the general public. Both uses generate a profit. Of course, the public use profit would be UBTI, but what about the member events?

It seems to me that the member events promote "fraternity", thereby meeting exempt purpose. Am I over-generalizing?

I think if they all where their big Moose Hats while smoking, eating and drinking, like in the Flintstones, you should be fine.

Can you cite this comment as representing "Substantial Authority?" Yes, of course you can. You can cite anything you want for that purpose. Will the IRS accept it as "Substantial Authority?" I have my doubts.

Anyway, see this:

http://www.irs.gov/pub/irs-tege/eotopicf04.pdf

And do note, illegal gambling amongst members should be fine too, as per that old RR.

Thanks, Chris. I like the Flintstones reference.


Related issue, different question.

This organization has many member-related social events throughout the year. They are usually a dinner. Members are free to bring guests. The organization does make a profit on such events. It probably is not much of a profit if we were to go through the hassle of allocating overhead expenses. Again, I do not suspect this would be UBTI for same reasons, above. The intent is not to generate profit, the intent is to fraternize.

The prior CPA was reporting these events as a Fund Raising Event on Form 990, Part VIII, Line 8a and allocating to Exempt Income. I think Line 2a Program Service Revenue is more appropriate. I know I am nit-picking, but the $$'s just look too big to show as a Fund Raiser. It's more than the total dues that the members pay.

What's the program that this represents revenue from?

Fraternal Unity

The FU program? I've heard of that.