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Internal Revenue Code, § 277. Deductions Incurred By Certain Membership Organizations In Transactions With Members

I.R.C. § 277(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.
I.R.C. § 277(b) Exceptions
Subsection (a) shall not apply to any organization—
I.R.C. § 277(b)(1)
which for the taxable year is subject to taxation under subchapter H or L,
I.R.C. § 277(b)(2)
which has made an election before October 9, 1969, under section 456(c) or which is affiliated with such an organization,
I.R.C. § 277(b)(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
I.R.C. § 277(b)(4)
which is engaged primarily in the gathering and distribution of news to its members for publication.
(Added by Pub. L. 91-172, title I, 121(b)(3)(A), Dec. 30, 1969, 83 Stat. 540, and amended by Pub. L. 94-568, 1(c), Oct. 20, 1976, 90 Stat. 2697; Pub. L. 99-514, title XVI, 1604(a), Oct. 22, 1986, 100 Stat. 2769; Pub. L. 113-295, Div. A, title II, Sec. 221(a)(41)(G), Dec. 19, 2014.)
BACKGROUND NOTES
AMENDMENTS
2014—Subsec. (a). Pub. L. 113-295, Div. A, Sec. 221(a)(41)(G), amended subsec. (a) by striking “, 244,”.
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 2014 AMENDMENT
Amendments by Pub. L. 113-295, Div. A, Sec. 221(a)(41), effective on the date of the enactment of this Act [Enacted: Dec. 19, 2014]. Pub. L. 113-295, Div. A, Sec. 221(a)(41)(K), provided that:
“(K) The amendments made by this paragraph shall not apply to preferred stock issued before October 1, 1942 (determined in the same manner as under section 247 of the Internal Revenue Code of 1986 as in effect before its repeal by such amendments).”
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.
[278. Repealed. Pub. L. 99-514, title VIII, 803(b)(6), Oct. 22, 1986, 100 Stat. 2356]
Section, added Pub. L. 91-172, title II, 216(a), Dec. 30, 1969, 83 Stat. 573, and amended Pub. L. 91-680, 1(a), (b), (d), Jan. 12, 1971, 84 Stat. 2064; Pub. L. 94-455, title II, 207(b)(1), (2), Oct. 4, 1976, 90 Stat. 1538, related to capital expenditures incurred in planting and developing citrus and almond groves, and certain capital expenditures of farming syndicates.
Effective Date of Repeal
Repeal applicable to costs incurred after Dec. 31, 1986, in taxable years ending after such date, except as otherwise provided, see section 803(d) of Pub. L. 99-514, set out as an Effective Date note under section 263A of this title.