Golf club membership with Capital gain

Forum|Forum|3 years ago
January 26, 2023
1 reply
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I joined a golf club 21 years ago for $35,000. I sold the membership this year For $63,000.

During that time we put in an irrigation system, new club house, expansion of the new club house, multiple hurricane, new greens x2, new sand traps etc.

Question

1. Is the gain from selling the membership taxable?

2. Is there a cost basis with all of the assessments over the 21 years. that increase my cost above the $35,000?

JosephS1

Yes, any gain on the sale of the membership is a taxable capital transaction.

Since you have had the membership for more than one year it would be a long-term capital item. For calculating the gain on your sale of the membership, your original membership fee of $35,000 is your starting number for your cost basis. This may be able to be increased by the assessments placed on you by the Club for improvements IF they were stated separately from any yearly dues and IF you did not previously deduct them in any way.

Keep in mind if the assessments were in any way labeled as repairs or maintenance then they will not be able to be added to your cost basis as normal maintenance and repairs are not considered capital improvements.

If you cannot provide substantiation between yearly dues and assessments, or if you previously deducted them as an entertainment expense for business, your basis will be your original membership fee of $35,000. Also, if the membership was solely for personal use and not used or deducted for business in any way, the gain, if any, would be taxable but if it shows a loss it would not be deductible as personal losses are not deductible.

How is Capital Gain or loss calculated

@degnaw

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