Other Tax Questions
Questions and comments on other topics covered in Fairmark.com, such as UTMA accounts, and any tax questions that don't fit our other categories.
Taxablity of Club Memebership
Posted by: amanda, November 3, 2007 02:10AM
We live in Florida and have what is referred to as an equity club membership in our country club. That is if we were to sell the membership back to the club (assuming they were buying or permitted selling it to someone else), we'd get 80% of what we paid for it returned to us. We paid $72,500 for it in 2000, and the same memberships are now selling for $45,000.

However, the club is adopting some new policies that might make it attractive to us to "gift" the membership back to the club in return for a lower level type of membership (social versus golf) that would be non refundable, in other words, have no equity value.

The question is what affect, if any, would this have any tax impact if we were to gift the membership back to the club? Could it qualify as a long term capital loss of $72,500? or....

If we sold it for $45,000 and would receive 80% of the proceeds i.e. $36,000, would the difference of $36,500 be a capital loss?

Any ideas???

Thanks,

Amanda

Re: Taxablity of Club Memebership
Posted by: Art, November 3, 2007 02:38AM
Yes.

But a capital loss of personal use property is disallowed, so you will not receive any tax benefit from the loss.

sell the premium membership
Posted by: jainen, November 4, 2007 12:21AM
>>"gift" the membership back to the club in return for a lower level type of membership<<

Why wouldn't you sell the premium membership for $45K, then buy the cheaper level and keep the difference? If you sold it for $45K why would you only receive $36K, since the 80% applied to the original price (or at least they promised it applied when you bought it)?

I guess I don't understand your question. Anyway, I do understand Art's answer which is unfortunately correct.

Re: Taxablity of Club Memebership
Posted by: amanda, November 10, 2007 12:37PM
I am sorry I did not clarify my question....as an alternative, can I gift our membership to the club in order to downgrade our membership to a social membership and avoid continuing to pay dues and assessments as a golf membe in return for a lower level type of membership (social versus golf) that would be non refundable. It would have no equity value. Would I be able to take a charitable deduction on the original membership fee (72,500) or $45000? Or would the gift of the membership back to the club not be considered a charitable deduction since the club is not a charity. Thanks so much for your advice.

while it lasted
Posted by: jainen, November 10, 2007 02:53PM
>>would the gift of the membership back to the club not be considered a charitable deduction since the club is not a charity<<

I think you've answered your own question, Amanda. Another way to express the same thing is, "It was fun while it lasted."



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