The Sixth Circuit Court of Appeals has affirmed a Tax Court decision holding that a 501(c)(7) social club may not use losses from its non-member social events to offset gains from its investment activities because the non-member events were not operated with an intent to profit. It has held that the club did not demonstrate a profit motive for the activity that had shown significant losses for 14 straight years. Generally, a social club may deduct losses from non-member activities against other taxable gains so long as those activities are “trades or businesses,” the Court said. Because profit motive is the most important indicia of a trade or business, the U.S. Supreme Court has required a...