Click here to read about the services we provideClick here to learn more about the industries we serveClick here to learn more about Blue & Co., LLCClick here to visit the main page of the Blue & Co., LLC  websiteClick here for valuable resourcesClick here to read about careers at Blue & Co., LLCClick here to read recent press releases of Blue & Co., LLCClick here to contact us



  Print Version

By Nancy Kirchner, CPA – Tax Manager

A U.S. Tax Court ruling last month could have a large impact on the tax-exempt status of booster clubs and similar type groups across the U.S. after the court upheld the revocation of the exempt status of a parent run booster club that supported gymnastics.

In Capital Gymnastics Booster Club v. Commissioner [T.C. Mem. 2013-193 (Aug.16, 2013] the decision to revoke the exempt status was upheld because it was determined that the Booster Club was not operated exclusively for exempt purposes within the meaning of IRC sec 501(c)(3).

Typically booster clubs are tax-exempt organizations formed by parents to provide support to students in the classroom or for specific extracurricular activities. The groups often solicit parent contributions and raise outside funds by sponsoring auctions, holding car washes or selling gift wrap or candy. The money is then used to defray costs of extras such as buying equipment or funding trips to competitions or events.

Many of these booster clubs are organized as tax-exempt 501(c)(3) charities, a category that also includes a huge number of schools, religious groups and health-care groups. However, to be tax-exempt, booster clubs and similar groups have to meet the same requirements as other charities. That means a group must serve the public interest, and its earnings can't benefit only a few people. That second requirement—known in tax law as "private inurement" is where the Capital Gymnastics Booster Club ran into trouble.

The court ruled that almost all of the petitioner's fundraising proceeds were earmarked to benefit those individuals who fundraised. "That dollar-for-dollar arrangement constituted inurement and private benefit in violation of section 501(c)(3) because the methodology furthers private interests rather than the team or the organization as a whole."

Although the decision applies only to this club, experts say the IRS will take it seriously when reviewing other groups.

Source: T.C. Memo. 2013-193 Capital Gymnastics Booster Club, Inc., Petitioner v. Commissioner of Internal Revenue, Respondent (click here for pdf)


If you have any questions regarding the article above or any other issue affecting your not-for-profit organization please contact your Blue & Co. advisor or e-mail us at or call us at 800-717-BLUE


Please visit our website at for more information regarding the services we provide.

CIRCULAR 230 DISCLOSURE: To ensure compliance with recently-enacted U.S. Treasury Department Regulations, we are now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including any attachments, is not intended or written by us to be used, and cannot be used, by anyone for the purpose of avoiding federal tax penalties that may be imposed by the federal government or for promoting, marketing or recommending to another party any tax-related matters addressed herein.


Blue & Co, LLC | 101 West Kirkwood Avenue | Suite 236 | Bloomington, IN 47404

Blue & Co, LLC | 12800 N. Meridian Street | Suite 400 | Carmel, IN 46032 *

Blue & Co, LLC | 627 Washington Street |  Columbus, IN 47201

Blue & Co, LLC | 8800 Lyra Drive | Suite 450 |  Columbus, OH 43240

Blue & Co, LLC | One American Square | Suite 2200 | Indianapolis, IN 46282

Blue & Co, LLC | 250 West Main Street | Suite 2900 | Lexington, KY 40507

Blue & Co, LLC | 2650 Eastpoint Parkway | Suite 300 | Louisville, KY 40223

Blue & Co, LLC | 106 Community Drive  | Seymour, IN 47274

* firm administration location

Privacy Notice
Please add Blue & Co., LLC to your approved senders list to ensure uninterrupted communication.