Waco Lodge No. 166, Benevolent & Protective Order of Elks v. Commissioner of Internal Revenue

On 49 weeknights during the 1976 fiscal year, Waco Lodge No. 166 of the Benevolent & Protective Order of Elks held profit-making bingo games. The question before us is whether these profits are subject to taxation as income from a trade or business unrelated to the Lodge’s tax-exempt purpose. The Tax Court found that they were and upheld the Internal Revenue Service’s assessment of a $647.66 tax deficiency. We affirm.

The Lodge, a unit of a national fraternal organization, is exempt from most federal internal revenue taxes under 26 U.S.C.A. §§ 501(a) and (c)(8) (West 1967). 1 During the 1976…