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BK-CPA
BK-CPA, Certified Public Accountant (CPA)
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Experience:  Owner of a CPA firm
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I purchased a golf club membership (equity membership) seven

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I purchased a golf club membership (equity membership) seven years ago for $165000 and sold it for $100000 this year. There were $60000 in transfer fees charged following the sale of the membership. May I deduct the loss, or any part of the loss from my taxable income?
Submitted: 4 years ago.
Category: Tax
Expert:  BK-CPA replied 4 years ago.

Your golf membership is just a personal asset/expense (most are, unless you are a golf pro, etc.). Here is the tax code. I'm sorry I could not give you a better answer here. Thank you for your question.

 

http://www.law.cornell.edu/uscode/uscode26/usc_sec_26_00000262----000-.html

 

§ 262. Personal, living, and family expenses

 

How Current is This?

(a) General rule Except as otherwise expressly provided in this chapter, no deduction shall be allowed for personal, living, or family expenses.

 

 

To the extent you have an investment in the club (like a share of stock that you plan to sell again), you could deduct a capital loss, yes. Again, here is the code:

 

http://www.law.cornell.edu/uscode/uscode26/usc_sec_26_00000165----000-.html

 

(c) Limitation on losses of individuals In the case of an individual, the deduction under subsection (a) shall be limited to-

 

(1) losses incurred in a trade or business;

 

(2) losses incurred in any transaction entered into for profit, though not connected with a trade or business; and

 

(3) except as provided in subsection (h), losses of property not connected with a trade or business or a transaction entered into for profit, if such losses arise from fire, storm, shipwreck, or other casualty, or from theft.

 



Edited by BK-CPA on 9/11/2010 at 3:25 AM EST
Expert:  BK-CPA replied 4 years ago.

(ie... it is likely a personal, non-deductible loss, to be clear)

 

See here (I agree w/ southparkcpa below):

 

http://www.taxalmanac.org/index.php/Discussion:1099misc_golf_club_membership_sale%3F

 

Kelly (talk|edits) said:

19 February 2008
hi--Two clients have rec'd 1099MISC for sale proceeds from golf club memberships. Now IRS has sent CP2000 to one. I had shown on Line 21 as other income then zeroed it out (it was a personal loss). Any ideas or experience with this? thanks Kelly!

Southparkcpa (talk|edits) said:

19 February 2008
I agree with you except I would have filed a schedule C and backed out the expense as a direct expense simply to avoid the CP notice.

It is a non deductible capital loss as I see it. The 1099 misc is issued incorrectly.

File a certified response, state your case and you should be fine.

Customer: replied 4 years ago.

I agree that club dues and expenses such as meals, tournament fees and the like would not be deductible unless I was a golf pro, which I am not.

 

Is an "equity membership" in a golf club construed to be "an investment" in the club by the IRS? Is there some specific language with the IRS that precludes an equity membership in a golf club from being classified as "an investment"? After purchasing the membership, the value of the membership rose above $250000, and then dropped to $100000. If the membership was sold for $250000, would my gain be taxed?

Expert:  BK-CPA replied 4 years ago.

Unfortunately, gains on sales of personal assets are taxable, but losses generally are not deductible.

 

Sell your personal car, for example, and you'll pay tax on a gain, but you cannot deduct the loss. The same goes for a personal golf membership. You could say you "invested" in your car, could you not?... sorry. I have to remain conservative on this one. Maybe, if you found a local professional and had the right circumstances, it would be considered an investment and would be deductible, but I don't believe I'll be able to come to that conclusion here for you. I wish I could.

 

Thank you.

 

 



Edited by BK-CPA on 9/11/2010 at 3:59 AM EST
BK-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 804
Experience: Owner of a CPA firm
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