
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC277]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
                      PART IX--ITEMS NOT DEDUCTIBLE
 
Sec. 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.

(Added Pub. L. 91-172, title I, Sec. 121(b)(3)(A), Dec. 30, 1969, 83 
Stat. 540; amended Pub. L. 94-568, Sec. 1(c), Oct. 20, 1976, 90 Stat. 
2697; Pub. L. 99-514, title XVI, Sec. 1604(a), Oct. 22, 1986, 100 Stat. 
2769.)

                       References in Text

    The Securities Exchange Act of 1934, referred to in subsec. (b)(3), 
is act June 6, 1934, ch. 404, 48 Stat. 881, as amended, which is 
classified principally to chapter 2B (Sec. 78a et seq.) of Title 15, 
Commerce and Trade. For complete classification of this Act to the Code, 
see section 78a of Title 15 and Tables.
    The Commodity Exchange Act, referred to in subsec. (b)(3), is act 
Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended, which is classified 
generally to chapter 1 (Sec. 1 et seq.) of Title 7, Agriculture. For 
complete classification of this Act to the Code, see section 1 of Title 
7 and Tables.


                               Amendments

    1986--Subsec. (b)(4). Pub. L. 99-514 added par. (4).
    1976--Subsec. (a). Pub. L. 94-568 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.


                    Effective Date of 1986 Amendment

    Section 1604(b) of Pub. L. 99-514 provided that: ``The amendment 
made by this section [amending this section] shall apply to taxable 
years beginning after the date of the enactment of this Act [Oct. 22, 
1986].''


                    Effective Date of 1976 Amendment

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


                             Effective Date

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

                  Section Referred to in Other Sections

    This section is referred to in section 404 of this title.
