Falcon Basketball League, an exempt organization, is a youth basketball league for children ages 12 through 14. The league has existed for 30 years. In the past, revenue for operations has been provided through community fund-raising and by parents' sales of snacks at the games. Due to a projected revenue shortfall of approximately $5,000, the governing board has decided to charge admission to the basketball games of $1.00 for adults and $0.50 for children.

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a. Will the admission charge affect Falcon's tax-exempt status? Charging an admission fee

willwill not

result in loss of exempt status.

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b. What are the tax consequences to Falcon of the net income from snack sales and the new admission fee?

Only the snack revenueOnly the admissions revenueBoth the snack and admissions revenuesNeither the snack nor admissions revenues

are associated with an unrelated trade or business of Falcon. Therefore, such revenues

areare not

exempt from Federal income tax.

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c. As the volunteer treasurer of the Falcon League, complete a memo for the entity's Board of Directors in which you explain the effect, if any, of the admission fee policy on Falcon's exempt status.

MEMORANDUM
Date:	April 20, 2023
To:	Board of Falcon Basketball League
From:	Anne Sims, Treasurer
Subject:	The Effect of Charging an Admission Fee on Tax-Exempt Status
As you are aware, the Falcon Basketball League is exempt from Federal income tax. Several board members have raised the question of whether the new policy of charging small admission fees will affect our exempt status.
My research has led me to conclude that the charging of the admission fees willwill not affect our exempt status. Therefore, we areare not required to notify the IRS that we are now charging an admission fee.