Unrelated business taxable income of social clubs: Nonrecognition of gain

A social club does not recognize gain from selling property if:

• The property is used directly in performing its exempt function; and
• The club purchases and uses other property directly in performing its exempt function within a period beginning one year before and ending three years after the date of the previously owned property’s sale.

See section 512(a)(3)(D) of the Internal Revenue Code.