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Keywords

statuteappealhearingcorporationnonprofit

plaintiffdefendantstatutecorporationnonprofit

Related Cases

Youth Tennis Foundation v. Tax Commission, 554 P.2d 220

Facts

The Youth Tennis Foundation of Utah, a nonprofit corporation, conducted a professional tennis tournament in 1973 and charged admissions that exceeded its expenses. The Tax Commission assessed a sales tax on the admissions, arguing that the foundation was operating for profit. After an administrative hearing, the Tax Commission affirmed the assessment, leading to the foundation's appeal.

Plaintiff, Youth Tennis Foundation of Utah, a nonprofit corporation, conducted a professional tennis tournament in 1973, and charged admissions which totaled more than its expenses. On the basis that this was an operation for profit, defendant Tax Commission assessed the four per cent sales tax, amounting to $1,364.80 on the tickets sold.

Issue

Did the Youth Tennis Foundation of Utah qualify as a nonprofit charitable corporation, and were the admissions charged for its tennis tournament exempt from sales tax under the relevant statute?

Plaintiff contends that it is a charitable institution and that the conducting of this tennis tournament was an essential part of its ‘regular activities in performing its charitable functions' within the meaning of that statute.

Rule

Under Section 59—15—6, U.C.A.1953, sales made by charitable institutions in the conduct of their regular charitable functions are exempt from taxation.

Exempt sales: all sales made to or by religious or charitable institutions in the conduct of the regular religious or charitable functions and activities . . . shall be exempt from taxation under this act.

Analysis

The court analyzed the foundation's activities and its charter, concluding that the tennis tournament was consistent with its charitable purpose of promoting amateur tennis. The court found that the foundation's practices, including charging admission fees, were incidental to its charitable objectives and did not transform its activities into a profit-making enterprise.

It does not appear that the fact that the plaintiff engages in the practices just discussed carries it generally into the field of competition with private enterprise. Its activities are correlated to the prudent management of its resources in order to better accomplish its commitment to the humanitarian purposes of encouraging and supporting the improvement of the moral, mental and physical welfare of the public.

Conclusion

The court concluded that the Youth Tennis Foundation of Utah met the statutory requirements for a nonprofit charitable corporation and that the admissions charged for the tennis tournament were exempt from sales tax. The case was remanded for the entry of an appropriate order.

On the basis of what has been said herein, it is our conclusion that the plaintiff meets the statutory requirements as a nonprofit charitable corporation and that the tennis tournament here under challenge was part of its regular charitable activities which should be exempt from taxation.

Who won?

Youth Tennis Foundation of Utah prevailed because the court determined that its activities were charitable in nature and met the statutory criteria for tax exemption.

The court's final decision or holding in 1–2 sentences.

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