An Act to amend the Internal Revenue Code of 1954 to permit the prepaid dues income of certain membership organizations to be included in gross income for the taxable years to which the dues relate
PL 87-109 (H.R.929), enacted 07/26/1961

aeq. 
222 
PUBLIC LAW 87-109-JULY 26, 1961 
[76 S T A T . 
Public Law 87-109 
July 26, 1961 
" ^ 
^^"^ 
[H. R. 929] 
To amend the Internal Revenue Code of 1954 to permit the prepaid dues 
income of certain membership organizations to be included in gross income 
for the taxable years to which the dues relate. 
Be it enacted by the /Senate and House of Representatives 
of the 
Memb^VhT*'* - ^^^^^^ /States of America in Congress assembled, That (a) subpart 
ganiMUons.^ *"' B of part I I of Subchapter E of chapter 1 of the Internal Revenue 
68A Stat. 152. 
Code of 1954 (relating to taxable years for which items of gross 
income are included) is amended by adding at the end thereof the 
following new section: 
"SEC. 456. PREPAID DUES INCOME OF CERTAIN MEMBERSHIP OR-
GANIZATIONS. 
"(a) YEAR IN W H I C H INCLUDED.—Prepaid dues income to which 
this section applies shall be included in gross income for the taxable 
years during which the liability described in subsection (e) (2) exists. 
"(b) WHERE TAXPAYER'S LIABILITY CEASES.—In the case of any 
prepaid dues income to which this section applies— 
"(1) If the liability described in subsection (e) (2) ends, then 
so much of such income as was not includible in gross income 
under subsection (a) for preceding taxable years shall be in-
cluded in gross income for the taxable year in which the liability 
ends. 
"(2) If the taxpayer ceases to exist, then so much of such 
income as was not includible in gross income under subsection 
(a) for preceding taxable years shall be included in gross income 
for the taxable year in which such cessation of existence occurs. 
"(c) PREPAID DUES INCOME TO W H I C H THIS SECTION APPLIES— 
"(1) ELECTION or BENEFITS.—This section shall apply to pre-
paid dues income if and only if the taxpayer makes an election 
under this section with respect to the trade or business in connec-
tion with which such income is received. The election shall be 
made in such manner as the Secretary or his delegate may by 
regulations prescribe. 
No election may be made with respect to a 
trade or business if in computing taxable income the cash receipts 
and disbursements method of accounting is used with respect to 
such trade or business. 
" (2) SCOPE or ELECTION.—An election made under this section 
shall apply to all prepaid dues income received in connection with 
the trade or business with respect to which the taxpayer has made 
the election; except that the taxpayer may, to the extent per-
mitted under regulations prescribed by the Secretary or his dele-
gate, include in gross income for the taxable year of receipt the 
entire amount of any prepaid dues income if the liability from 
which it arose is to end within 12 months after the date of re-
ceipt. 
Except as provided in subsection (d), an election made 
under this section shall not apply to any prepaid dues income re-
ceived before the first taxable year for which the election is 
made. 
" (3) W H E N ELECTION MAY BE MADE.— 
"(A) W I T H CONSENT.—A taxpayer may, with the consent 
of the Secretary or his delegate, make an election under this 
section at any time. 
"(B) WITHOUT CONSENT.—A taxpayer may, without the 
consent of the Secretary or his delegate, make an election 
under this section for its first taxable year (i) which begins 
after December 31, 1960, and (ii) in which it receives pre-
76 S T A T . ] 
PUBLIC LAW 87-109-JULY 26, 1961 
223 
paid dues income in the trade or business. Such election 
shall be made not later than the time prescribed by law for 
filing the return for the taxable year (including extensions 
thereof) with respect to which such election is made. 
"(4) PERIOD TO WHICH ELECTION APPLIES.—^An election under 
this section shall be effective for the taxable year with respect to 
which it is first made and for all subsequent taxable years, unless 
the taxpayer secures the consent of the Secretary or his delegate 
to the revocation of such election. For purposes of this title, the 
computation of taxable income under an election made under this 
section shall be treated as a method of accounting. 
"(d) 
TRANSITIONAL RULE.— 
"(1) 
AMOUNT INCLUDIBLE IN GROSS INCOME FOR ELECTION 
YEARS.—If a taxpayer makes an election under this section with 
respect to prepaid dues income, such taxpayer shall include in 
gross income, for each taxable year to which such election applies, 
not only that portion of prepaid dues income received in such 
year otherwise includible in gross income for such year under this 
section, but shall also include in gross income for such year an 
additional amount equal to the amount of prepaid dues income 
received in the 3 taxable years preceding the first taxable year to 
which such election applies which would have been included in 
gross income in the taxable year had the election been effective 
3 years earlier. 
"(2) 
DEDUCTIONS OF AMOUNTS INCLUDED IN INCOME MORE THAN 
ONCE.—A taxpayer who makes an election with respect to prepaid 
dues income, and who includes in gross income for any taxable 
year to which the election applies an additional amount com-
puted under paragraph (1), shall be permitted to deduct, for 
such taxable year and for each of the 4 succeeding taxable years, 
an amount equal to one-fifth of such additional amount, but only 
to the extent that such additional amount was also included in 
the taxpayer's gross income during any of the 3 taxable years 
preceding the first taxable year to which such election applies. 
" (e) DEFINITIONS.—For purposes of this section— 
"(1) PREPAID DUES INCOME.—The term 'prepaid dues income' 
means any amount (includible in gross income) which is received 
by a membership organization in connection with, and is directly 
attributable to, a liability to render services or make available 
membership privileges over a period of time which extends 
beyond the close of the taxable year in which such amount is 
received. 
"(2) LIABILITY.—The term 'liability' means a liability to 
render services or make available membership privileges over a 
period of time which does not exceed 36 months, which liability 
shall be deemed to exist ratably over the period of time that such 
services are required to be rendered, or that such membership 
privileges are required to be made available. 
"(3) MEMBERSHIP ORGANIZATION.—The term 'membership or-
ganization' means a corporation, association, federation, or other 
organization— 
"(A) organized without capital stock of any kind, and 
"(B) no part of the net earnings of which is distributable 
to any member. 
"(4) RECEIPT OP PREPAID DUES INCOME.—Prepaid dues income 
shall be treated as received during the taxable year for which 
it is includible in gross income under section 451 (without regard 
to this section)." 
224 
PUBLIC LAW 87-llO^ULY 26, 1961 
[76 ST A T , 
Applicability. 
(b) The table of sections for such subpart B is amended by add-
ing at the end thereof the following: 
"Sec. 456. Prepaid dues income of certain membership organiza-
tions." 
SEC. 2. The amendments made by this Act shall apply with respect 
to taxable years beginning after December 31,1960. 
Approved July 26, 1961. 
July 26, 1961 
[H. R. 4591] 
Public Law 87-110 
AN ACT 
To contiJuie until the close of June 30, 1962, the suspension of duties on metal 
scrap, and for other purposes. 
Metal scrap. 
Duty suspension. 
74 
use 
note. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled, That the first sen-
tence of section 2 of the Act of September 30, 1950 (Public Law 869, 
Stat. 361. 1
9 Eighty-first Congress), is hereby amended by striking out "June 30, 
1001, par. 301 ^gg^„ ^^^^ inserting in lieu thereof "June 30, 1962": Provided, That 
this Act shall not apply to lead scrap, lead alloy scrap, antimonial 
lead scrap, scrap battery lead or plates, zinc scrap, or zinc alloy scrap, 
or to any form of tungsten scrap, tungsten carbide scrap, or tungsten 
alloy scrap; or to articles of lead, lead alloy, antimonial lead, zinc, or 
zinc alloy, or to articles of tungsten, tungsten carbide, or tungsten 
alloy, imported for remanufacture by melting. 
SEC. 2. The first section of this iCct shall not apply to any article 
provided for in section 4541 of the Internal Revenue Code of 1954. 
SEC. 3. (a) Section 201 of the Tariff Act of 1930, as amended (19 
U.S.C., sec. 1201), is amended by adding at the end thereof the 
following new paragraph: 
"PAR. 1826. Horsemeat, fresh, chilled, or frozen, whether or not 
decharacterized (except horsemeat packed in immediate containers 
weighing with their contents less than ten pounds each)." 
(b) The amendments made by this section shall apply to articles 
entered, or withdrawn from warehouse, for consumption, on or after 
the date of enactment of this Act, and to articles covered by entries 
or withdrawals which have not been liquidated or the liquidation of 
which has not become final on such date of enactment. 
Approved July 26, 1961. 
26 u s e 4541. 
46 Stat. 672. 
Horsemeat 
July 26, 1961 
[H. R. 5548] 
Public Law 87-111 
AN ACT 
To authorize the Secretary of the Interior to acquire approximately nine acres 
of land for addition to Cumberland Gap National Historical Park, and for 
other purposes. 
Cumberland Gap 
National 
Wstori-
cal Park, Ky. 
Additional lands. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled, That the Secretary 
of the Interior may acquire for addition to Cumberland Gap National 
Historical Park the following described land and interests in land, 
located in Bell County, Kentucky: Provided, That appropriated funds 
may not be used to pay more than one-half the cost of such acquisition. 
Beginning at a concrete marker on the west boundary of Cumber-
land Gap National Historical Park and being on the south margin of 
Avondale Avenue in the city of Middlesboro, Kentucky, and also on 
the south bank of Davis Branch; thence along the park boundary the 
following courses and distances: