CHICAGO ENGINEERS'CLUB v. United States, 42044.
| Decision Date | 04 February 1935 |
| Docket Number | No. 42044.,42044. |
| Citation | 80 Ct. Cl. 615,9 F. Supp. 680 |
| Parties | CHICAGO ENGINEERS' CLUB v. UNITED STATES. |
| Court | U.S. Claims Court |
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Herman T. Reiling, of Chicago, Ill. (KixMiller, Baar & Hoffman, of Chicago, Ill., on the brief), for plaintiff.
Fred K. Dyar, of Washington, D. C., and Frank J. Wideman, Asst. Atty. Gen., for the United States.
Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.
The plaintiff seeks to recover the sum of $14,437.33, with interest thereon; the principal sum being the amount of taxes paid on dues and initiation fees paid by plaintiff under section 501 of the Revenue Act of 1926 (26 USCA § 872 note), and section 413 of the Revenue Act of 1928 (26 USCA § 872 and note). The period involved is from May 15, 1926, to April 25, 1930.
The plaintiff duly filed its claim for refund on the amount of the tax so paid, giving as a ground therefor that it was not a "social, sporting, or athletic club or organization" within the meaning of the statutes before mentioned. The claim for refund was disallowed by the Commissioner of Internal Revenue. The suit has been timely brought, and the sole issue is whether the plaintiff club falls within the definition of a "social, sporting, or athletic club or organization."
The applicable statutes (section 501 of the 1926 act, and section 413 of the 1928 act) and Treasury Regulations 43, articles 35 and 36, have been considered by this and other courts in many cases. While there is an apparent conflict in the earlier decisions as to what constitutes a social club within the meaning of the statutes that cannot be reconciled, the rule seems now well settled that, if the predominant purpose of an organization is not social and its social activities are merely incidental to the furtherance of its different and predominating purpose, the organization is not a social club within the meaning of the taxing acts. If, on the contrary, the social features of an organization are a material part of its activities and necessary to its existence, and are not merely incidental to its predominant nonsocial purpose, it is regarded as a social club within the meaning of the revenue laws. Army & Navy Club of America v. United States, 53 F.(2d) 277, 72 Ct. Cl. 684.
Accepting the rule announced in the Army & Navy Club of America Case, supra, and in numerous other decisions, not necessary to cite here, as the correct interpretation of the applicable statutes...
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