[Code of Federal Regulations]
[Title 26, Volume 1]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.271-1]

[Page 597-598]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.271-1  Debts owed by political parties.

    (a) General rule. In the case of a taxpayer other than a bank (as 
defined in section 581 and the regulations thereunder), no deduction 
shall be allowed under section 166 (relating to bad debts) or section 
165(g) (relating to worthlessness of securities) by reason of the 
worthlessness of any debt, regardless of how it arose, owed by a 
political party. For example, it is immaterial that the debt may have 
arisen as a result of services rendered or goods sold or that the 
taxpayer included the amount of the debt in income. In the case of a 
bank, no deduction shall be allowed unless, under the facts and 
circumstances, it appears that the bad debt was incurred to or purchased 
by, or the worthless security was acquired by, the taxpayer in 
accordance with its usual commercial practices. Thus, if a bank makes a 
loan to a political party not in accordance with its usual commercial 
practices but solely because the president of the bank has been active 
in the party no bad debt deduction will be allowed with respect to the 
loan.
    (b) Definitions--(1) Political party. For purposes of this section 
and Sec. 1.276-1, the term political party means a political party (as 
commonly understood), a National, State, or local committee thereof, or 
any committee, association, or organization, whether incorporated or 
not, which accepts contributions (as defined in subparagraph (2) of this 
paragraph) or makes expenditures (as defined in subparagraph (3) of this 
paragraph) for the purpose of influencing or attempting to influence the 
election of presidential or vice-presidential electors, or the 
selection, nomination, or election of any individual to any Federal, 
State, or local elective public office, whether or not such individual 
or electors are selected, nominated, or elected. Accordingly, a 
political party includes a committee or other group which accepts 
contributions or makes expenditures for the purpose of promoting the 
nomination of an individual for an elective public office in a primary 
election, or in any convention, meeting, or caucus of a political party. 
It is immaterial whether the contributions or expenditures are

[[Page 598]]

accepted or made directly or indirectly. Thus, for example, a committee 
or other group, is considered to be a political party, if, although it 
does not expend any funds, it turns funds over to another organization, 
which does expend funds for the purpose of attempting to influence the 
nomination of an individual for an elective public office. An 
organization which engages in activities which are truly nonpartisan in 
nature will not be considered a political party merely because it 
conducts activities with respect to an election campaign if, under all 
the facts and circumstances, it is clear that its efforts are not 
directed to the election of the candidates of any particular party or 
parties or to the selection, nomination or election of any particular 
candidate. For example, a committee or group will not be treated as a 
political party if it is organized merely to inform the electorate as to 
the identity and experience of all candidates involved, to present on a 
nonpreferential basis the issues or views of the parties or candidates 
as described by the parties or candidates, or to provide a forum in 
which the candidates are freely invited on a nonpreferential basis to 
discuss or debate the issues.
    (2) Contributions. For purposes of this section and Sec. 1.276-1, 
the term contributions includes a gift, subscription, loan, advance, or 
deposit, of money or anything of value, and includes a contract, 
promise, or agreement to make a contribution, whether or not legally 
enforceable.
    (3) Expenditures. For purposes of this section and Sec. 1.276-1, 
the term expenditures includes a payment, distribution, loan, advance, 
deposit, or gift, of money or anything of value, and includes a 
contract, promise, or agreement to make an expenditure, whether or not 
legally enforceable.

[T.D. 6996, 34 FR 832, Jan. 18, 1969]