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fees, although earmarked for capital expenditures, could not be
treated as capital contributions because the members had no
equity interest in the club and received no legal entitlement for
the payment of the fees other than access to the club and the
right to vote for the board of directors. The court commented
that the earmarking of the payments for capital expenditures was
relevant and pertinent, but not determinative of, a contribution
to capital. Id at 675.
In Affiliated Government Employees Distrib. Co. v.
Commissioner, 37 T.C. 909 (1962), affd. 322 F.2d 872 (9th Cir.
1963), we addressed whether membership fees paid to the taxpayer,
a nonstock membership corporation operating department stores for
the exclusive use of its members and their guests, were
contributions to capital. We held that the fees were payments
for the privilege of shopping at the taxpayer’s stores and were
not contributions to capital because the members were not
entitled to share in the profits of the enterprise and had no
assurance of a share in the dissolution proceeds because the
memberships were nonassignable and terminated at death. Id. at
918.
In Oakland Hills Country Club v. Commissioner, 74 T.C. 35
(1980), we denied a country club's motion for summary judgment,
holding that a "proprietary interest" is not sufficient to turn a
membership fee into a capital contribution. However, the members
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