26 U.S.C. § 277 | Deductions incurred by certain membership organizations in transactions with members

(a)

General rule

In the case of a social club or other membership organization which is operated primarily to furnish services or goods to members and which is not exempt from taxation, deductions for the taxable year attributable to furnishing services, insurance, goods, or other items of value to members shall be allowed only to the extent of income derived during such year from members or transactions with members (including income derived during such year from institutes and trade shows which are primarily for the education of members). If for any taxable year such deductions exceed such income, the excess shall be treated as a deduction attributable to furnishing services, insurance, goods, or other items of value to members paid or incurred in the succeeding taxable year. The deductions provided by sections 243 and 245 (relating to dividends received by corporations) shall not be allowed to any organization to which this section applies for the taxable year.

(b)

Exceptions

Subsection (a) shall not apply to any organization—

(1)

which for the taxable year is subject to taxation under subchapter H or L,

(2)

October 9, 1969 which has made an election before , under section 456(c) or which is affiliated with such an organization,

(3)

which for each day of any taxable year is a national securities exchange subject to regulation under the Securities Exchange Act of 1934 or a contract market subject to regulation under the Commodity Exchange Act, or

(4)

which is engaged primarily in the gathering and distribution of news to its members for publication.

Pub. L. 91–172, title I, § 121(b)(3)(A)Dec. 30, 196983 Stat. 540 Pub. L. 94–568, § 1(c)Oct. 20, 197690 Stat. 2697 Pub. L. 99–514, title XVI, § 1604(a)Oct. 22, 1986100 Stat. 2769 Pub. L. 113–295, div. A, title II, § 221(a)(41)(G)Dec. 19, 2014128 Stat. 4044(Added , , ; amended , , ; , , ; , , .)

Editorial Notes

References in Text

act June 6, 1934, ch. 404 48 Stat. 881 section 78a of Title 15The Securities Exchange Act of 1934, referred to in subsec. (b)(3), is , , which is classified principally to chapter 2B (§ 78a et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see and Tables.

act Sept. 21, 1922, ch. 369 42 Stat. 998 section 1 of Title 7The Commodity Exchange Act, referred to in subsec. (b)(3), is , , which is classified generally to chapter 1 (§ 1 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see and Tables.

Amendments

Pub. L. 113–2952014—Subsec. (a). struck out “, 244,” after “sections 243”.

Pub. L. 99–5141986—Subsec. (b)(4). added par. (4).

Pub. L. 94–5681976—Subsec. (a). provided that the deductions provided by sections 243, 244, and 245 (relating to dividends received by corporations) shall not be allowed to any organization to which this section applies for the taxable year.

Statutory Notes and Related Subsidiaries

Effective Date of 2014 Amendment

Pub. L. 113–295Oct. 1, 1942section 247 of this title Pub. L. 113–295 section 221(a)(41)(K) of Pub. L. 113–295 section 172 of this titleAmendment by not applicable to preferred stock issued before (determined in the same manner as under as in effect before its repeal by ), see , set out as a note under .

section 221(a) of Pub. L. 113–295 Pub. L. 113–295Dec. 19, 2014section 221(b) of Pub. L. 113–295 section 1 of this titleExcept as otherwise provided in , amendment by effective , subject to a savings provision, see , set out as a note under .

Effective Date of 1986 Amendment

Pub. L. 99–514, title XVI, § 1604(b)Oct. 22, 1986100 Stat. 2769

Oct. 22, 1986“The amendment made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [].”

, , , provided that:

Effective Date of 1976 Amendment

Pub. L. 94–568Oct. 20, 1976section 1(d) of Pub. L. 94–568 section 501 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Effective Date

Dec. 31, 1970section 121(g) of Pub. L. 91–172 section 511 of this titleSection applicable to taxable years beginning after , see , set out as an Effective Date of 1969 Amendment note under .