An Act to amend the Internal Revenue Code of 1954 with respect to the tax treatment of social clubs and certain other membership organizations, to provide for a study of tax incentives for recycling, and for other purposes.
PL 94-568 (H.R.1144), enacted 10/20/1976

PUBLIC LAW 94-568—OCT. 20, 1976 
90 STAT. 2697 
Public Law 94-568 
94th Congress 
An Act 
To amend the Internal Revenue Code of 1954 with respect to the tax treatment 
of social clubs and certain other membership organizations, to provide for a 
study of tax incentives for recycling, and for other purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States 
of America 
in Congress a^sembled^ That (a) section 
501(c) (7) of the Internal Kevenue Code of 1954 (relating to exempt 
organizations) is amended to read as follows: 
"(7) Clubs organized for pleasure, recreation, and other non-
profitable purposes, substantially all of the activities of which are 
for such purposes and no part of the net earnings of which inures 
to the benefit of any private shareholder." 
(b) Section 512(a)(3)(A) of such Code (relating to unrelated 
business taxable income) is amended by adding at the end thereof the 
following new sentence: "For purposes of the preceding sentence, the 
deductions provided by sections 243,244, and 245 (relating to dividends 
received by corporations) shall be treated as not directly connected 
with the production of gross income." 
(c) Section 277(a) of such Code (relating to deductions incurred 
by certain membership organizations in transactions with members) 
is amended by adding at the end thereof the following new sentence: 
"The deductions provided by sections 243, 244, and 245 (relating to 
dividends received by corporations) shall not be allowed to any orga* 
nization to which this section applies for the taxable year." 
(d) The amendments made by this section shall apply to taxable 
years beginning after the date of the enactment of this Act. 
SEC. 2. (a) Section 501 of the Internal Revenue Code of 1954 (relat-
ing to exemption from tax on corporations, certain trusts, etc.) is 
amended by redesignating subsection (h) as subsection (i) and by 
inserting after subsection (g) the following new subsection: 
"(g) 
PROHIBITION OF DISCRIMINATION BY CERTAIN SOCIAL CLUBS.— 
Notwithstanding subsection (a), an organization which is described 
in subsection (c) (7) shall not be exempt from taxation under sub-
section (a) for any taxable year if, at any time during such taxable 
year, the charter, bylaws, or other governing instrument, of such orga-
nization or any written policy statement of such organization contains 
a provision which provides for discrimination against any person 
on the basis of race, color, or religion.". 
(b) The amendment made by subsection (a) shall apply to taxable 
years begining after the date of the enactment of this Act. 
SEC. 3. (a) Paragraph (2) of section 301(g) of the Tax Reform 
Act of 1976 (relating to effective date for minimum tax provisions) is 
amended to read as follows: 
"(2) 
TAX CARRYOVER. 
" ( A ) I N GENERAL.—Except as provided in subparagraph 
(B), the amount of any tax carryover under section 56(c) 
of the Internal Revenue Code of 1954 from a taxable year 
beginning before January 1,1976, shall not be allowed as a tax 
carryover for any taxable year beginning after December 31, 
1975. 
Oct. 20, 1976 
[H.R. 1144] 
Taxes. 
Exempt 
organizations. 
26 use 501. 
26 use 512, 
26 use 243., 
244, 245. 
26 use 277. 
26 use 501 note. 
26 use 501, 
Effective date. 
26 use 501 note. 
26 use 56 note. 
Ante, p. 1549. 
26 use 56. 
90 STAT. 2698 
PUBLIC LAW 94-568—OCT. 20, 1976 
26 u s e 56. 
26 u s e 1371. 
26 u s e 524. 
Effective date. 
26 u s e 56 note. 
Ante, p. 1520. 
Study and 
investigation. 
26 u s e 7801 
note. 
Report to 
President and 
eongress. 
"(B) Except as provided by paragraph (4) and in section 
56(e) of the Internal Revenue Code of 1954, in the case of 
of a corporation which is not an electing small business cor-
poration (as defined in section 1371(b) of such Code) or a 
personal holding company (as defined in section 524 of such 
Code), the amount of any tax carryover under section 56(c) 
of such Code from a taxable year beginning before July 1, 
1976, shall not be allowed as a tax carryover for any taxable 
year beginning after June 30,1976.". 
(b) The amendments made by subsection (a) shall take effect on 
the date of the enactment of the Tax Reform Act of 1976. 
SEC. 4. (a) The Secretary of the Treasury, in cooperation with the 
Administrator of the Environmental Protection Agency, shall make a 
thorough and complete study and investigation of all pi-ovisions of the 
Internal Revenue Code of 1954 which currently impede or discourage 
the recycling of solid waste materials, and shall determine what actions 
Congress may take under the internal revenue laws to increase and 
encourage the recycling of solid waste materials. 
(b) The Secretary of the Treasury shall report his findings, together 
with specific legislative proposals and detailed revenue cost estimates, 
to the President and to the Congress at the earliest practicable date, 
but not later than six months after the date of the enactment of this 
Act. 
Approved October 20, 1976. 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 94-1353 (eomm. on Ways and Means). 
SENATE REPORT No. 94-1318 (eomm. on Finance). 
CONGRESSIONAL RECORD, Vol. 122 (1976): 
Aug. 24, considered and passed House. 
Oct. 1, considered and passed Senate, amended; House agreed to Senate 
amendment.