Capital Gymnastics Booster Club, Inc. v. Commissioner
United States Tax Court
106 T.C.M. 154 (2013)
Capital City Gymnastics Booster Club, Inc. (the club) (plaintiff) was organized in 1987 for the stated purpose of fostering national and international sports competition within the meaning of § 501(c)(3). The club’s members were parents of amateur athletes aged six through 18 who trained at the Capital Gymnastics National Training Center. Members paid annual dues in the amount of $40, which offset the club’s operating expenses. Members were also responsible for an annual assessment of $600 to $1,400 per athlete to cover competition costs, including entry fees for meets and coaches’ travel expenses. Athletes were not allowed to compete if the assessment was not paid, and there was no record of scholarships or any other relaxation of this requirement. Members could pay their children’s assessments directly or engage in fundraising to cover all or part the assessments. Fundraising primarily involved selling things like wrapping paper, discount cards, and cookie dough. Families that participated in fundraising were awarded points, each worth $10, in proportion to the fundraising profit they generated, and the value of the points was applied toward the family’s assessments. In 2003, the club had approximately 240 member families, about 110 of whom participated in fundraising. The commissioner of internal revenue (commissioner) (defendant) recognized the club as exempt pursuant to § 501(c)(3) of the Internal Revenue Code in 1988. However, after examining the club’s tax returns for 2003, the commissioner revoked the exemption on the ground that a portion of the club’s income inured to the private benefit of its members. The club sought a declaratory judgment reversing the commissioner’s determination. The club stipulated that its parent-members were insiders for purposes of § 501(c)(3) but argued that the recipients of its benefits were a charitable class of school-age children. The club also acknowledged that fundraising was a primary function of the organization.
Rule of Law
Holding and Reasoning (Gustafson, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 711,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 711,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,600 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.