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.