How many more intro flights can you sell?
A club holding 501(c)(7) exemption may take up to 35% of its gross receipts from outside the membership, and within that, no more than 15% from nonmember use of its facilities. Public rides land squarely in the inner one. Most committees have never done this division.
Where your club sits
against gross receipts of .
That is about
The back-of-the-envelope figure is wrong, and in your favour
The obvious sum is 15% of gross receipts minus what you already take, which on your figures gives . But ride revenue lands in the numerator and in gross receipts, so the denominator moves with it. Solving properly gives — about more room than the envelope says.
The error is in the safe direction, which is exactly why nobody catches it. A club quietly leaves a chunk of its allowance unused every year.
Your figures
Annual, from the accounts you already file. Gross receipts are computed as the sum of these — the tests are measured against that total, not against profit and not against the flying account alone.
Used only to convert the headroom above into a number of rides.
Your savings can count against you
Investment income falls inside the outer 35% test. Interest on the reserve you are building to replace the trainer sits in the same allowance as your ride revenue, so two pieces of obviously good management compete for one ceiling. Work out what the reserve should be earning in the fleet reserve calculator and bring the number back here.
There is also a way out nobody considers, because these are ratios rather than caps: growing member income by would bring the club back inside both tests without giving up a single ride.
x ≤ (0.15G − F) ÷ 0.85
from (F + x) ÷ (G + x) ≤ 0.15
- x
- the nonmember facility-use income, such as intro flights, you could still take this year
- G
- gross receipts for the year as they stand, before x: member income plus all nonmember income, investment income included
- F
- nonmember facility-use income already taken
- 0.15
- the share of gross receipts the safe-harbour test allows
The 0.85 in the denominator is the point. Money you take is added to gross receipts as well as to the numerator, so each extra dollar raises the ceiling it is being measured against. The headroom is not 0.15G − F, and treating it as though it were understates what is left.
What this assumes, and what it can't know
This is not tax advice, and it is not close to it. Exemption is judged on all the facts and circumstances of a particular organisation, and what counts as nonmember use of facilities in a given operation is a question for your club's own CPA. What this page delivers is knowing the test exists and roughly where you sit — which is the part most committees are missing.
Exceeding either percentage is not automatic revocation. The IRS position is that it will examine all the facts and circumstances. The practical significance is that the percentages are a safe harbour: inside them you are not having this conversation at all, and outside them your exemption rests on a discretionary judgment made by somebody who has never seen your airfield.
The categories are yours to get right, and this page cannot check them. It divides the four numbers you type in. If your books cannot separate member from nonmember receipts, that is itself the finding — a club that cannot make the distinction faces a presumption that all of it is taxable, which is a worse position than being over a line.
501(c)(7) is the usual form for a flying club, not the only one. These tests belong to it. A club holding 501(c)(3) exemption is under a different regime entirely — and has a dissolution clause worth understanding before anybody files anything.
Separately from all of this: a club with $1,000 or more of gross income from an unrelated business has a Form 990-T obligation regardless of where these percentages land.
Not yet checked by anyone but me. If you run a club's books and one of these assumptions is wrong, I would genuinely rather hear it than not — tell me and I will credit you here. This is a budgeting estimate, not a quote. Every club sets its own rates and they change; check with the club before relying on a number.
Common questions
How do you calculate how many more intro flights a 501(c)(7) club can sell?
Work out the dollar room left under each of the two nonmember income tests, take the smaller, and divide it by what you charge for an introductory flight. Under the 15% test, which covers nonmember use of club facilities such as public rides, the room is 15% of gross receipts minus what that use already brings in, divided by 0.85, on the club's annual figures. Under the outer 35% test the room is 35% of gross receipts minus all the nonmember income the club already receives, investment income included, divided by 0.65. Interest on a reserve competes with ride revenue for that ceiling, and can make the 35% test the one that binds first.
Is 501(c)(7) headroom just 15% of gross receipts minus what you already take?
No, the real room is larger. Ride revenue lands in the numerator and in gross receipts, so the denominator moves with it: each extra dollar raises the ceiling it is being measured against. Solving properly divides that back-of-the-envelope figure by 0.85. The error is in the safe direction, which is exactly why nobody catches it, and a club quietly leaves a chunk of its allowance unused every year.
How do you calculate a 501(c)(7) club's nonmember income percentage?
Divide nonmember income by the club's gross receipts for the year: nonmember use of facilities for the 15% test, and all income from outside the membership, investment income included, for the 35% test. Gross receipts include member income, and the tests are measured against that total, not against profit and not against the flying account alone. Take the annual figures from the accounts the club already files.
How can a club get back inside the 501(c)(7) nonmember income limits?
Either take less nonmember income or grow member income. The second is the way out nobody considers: the 35% and 15% tests are ratios rather than caps, so enough extra income from members brings a club back inside both tests without giving up a single ride. What counts as nonmember use of facilities in a given operation is a question for the club's own CPA.
Do the 35% and 15% nonmember income tests apply to a 501(c)(3) club?
No. The 35% and 15% nonmember income tests belong to 501(c)(7), which is the usual form for a flying club but not the only one. A club holding 501(c)(3) exemption is under a different regime entirely, and has a dissolution clause worth understanding before anybody files anything.