26 U.S.C. § 277 : US Code - Section 277: Deductions incurred by certain membership organizations in transactions with members

Search 26 U.S.C. § 277 : US Code - Section 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, 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.
(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) which has made an election before October 9, 1969, 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.