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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I belong to a country club. They have a membership drive where

Resolved Question:

I belong to a country club. They have a membership drive where as an incentive to get new members my dues would be decreased 100 every month for a year for every new member I get. Is this reduction in dues "income" and will/should the club send me a 1099 for this savings?
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.

Hello sdman,


No, this would not be considered taxable income to you and you would not receive a 1099 form from the club.


The dues that you are paying to begin with are simply a personal expense, no different than if you used your money to buy a show ticket or groceries. What you pay in dues has no affect whatsoever on your taxable income or taxes.


If this was helpful please press the Accept button. Positive feedback is also appreciated.


Thank you sdman



Merlo and other Tax Specialists are ready to help you
Customer: replied 7 years ago.
ok. well our board is having a tremendous debate about this in that some members feel that we are circumventing the law in some way by not issuing 1099's. They feel that the members are bein "paid" by this $1200 reduction in dues and thus they are "earning" this money and that it is in exchange for a service...

I found an irs circular with regard to misc income that stated that a reduction in a selling price, even after the purchase, is not income and I equate it with that. I am up against some tax professionals and lawyers who feel that it should be taxed.

I don't think it rises to the level of income but I just want to do what is right!

Thanks for your help!
Expert:  Merlo replied 7 years ago.

Hello again sdman,


This is most definitely not income to you. Look at it this way. You are a member of that club by choice, and you pay dues to belong to that club. But you are paying those dues because you choose to be a member, not because you are otherwise obligated to do so. It is a personal expense that you choose to pay. The dues that you pay are not allowed as a deduction from your taxable income, and so regardless of the amount that you pay, it has no affect on your taxable income.


If the club chooses to give you a reduction in dues as a membership drive incentive or for any other reason, by doing so they have not increased your income one bit. All they have done is decrease a personal expense that you are paying.


If you buy a product which has a rebate offer, do you think you should pay taxes on the amount of the rebate you received? Or if you use a coupon at the grocery store to reduce the price of a product, is that taxable income to you? These all fall in the same category as what you are talking about with the club dues being reduced.


I cannot imagine any tax professional actually thinking this could be considered taxable income.






Edited by Merlo on 1/2/2010 at 4:10 PM EST