Case: Homeowners Association Primarily Benefited Its Members Rather Than General Public, Denial of Exempt Status Was Proper (T.C. Memo) (IRC §501)

A homeowners association did not qualify for tax-exempt status under I.R.C. §501(c)(4) because it primarily benefited its members rather than the general public, the U.S. Tax Court held, affirming the IRS’s determination. Taxpayer, a homeowners association for a gated community, applied for tax-exempt status as a social welfare organization. The IRS denied the application, finding that Taxpayer did not benefit the community on an unrestricted basis since its facilities and services were limited to residents and guests. Taxpayer appealed the denial. The Tax Court held that Taxpayer failed to meet its burden of proving it operated exclusively for the promotion ...