[Code of Federal Regulations]
[Title 26, Volume 7]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.527-7]

[Page 233]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.527-7  Newsletter funds.

    (a) In general. For purposes of this section, a fund established and 
maintained by an individual who holds, has been elected to, or is a 
candidate (within the meaning of section 41(c)(2)) for nomination or 
election to, any Federal, State, or local elective public office for the 
use by such individual exclusively for an exempt function, as defined in 
paragraph (c) of this section, shall be a newsletter fund. If assets of 
a newsletter fund are used for any purpose other than the exempt 
function of the newsletter fund as defined in paragraph (c) of this 
section, such amount shall be treated as expended for the personal use 
of the individual who established and maintained such fund. In addition, 
future contributions to such fund are treated as income to the 
individual who established and maintained the fund. In such a case, the 
facts and circumstances may indicate that the fund was never established 
and maintained exclusively for an exempt function as defined in 
paragraph (c) of this section.
    (b) Determination of taxable income. A newsletter fund shall be 
treated as if it were a political organization for purposes of 
determining its taxable income. However, the specific $100 deduction 
provided by section 527(c)(2)(A) shall not be allowed.
    (c) Exempt function. For purposes of this section, the exempt 
function of a newsletter fund consists solely of the preparation and 
circulation of the newsletter. Among the expenditures treated as 
preparation and circulation expenditures of the newsletter are:
    (1) Secretarial services,
    (2) Printing,
    (3) Addressing, and
    (4) Mailing.
    (d) Nonexempt function purposes. Newsletter fund assets may not be 
used for campaign activities. Therefore, an exempt function of a 
newsletter fund does not include:
    (1) Expenditures for an exempt function as defined in Sec. 1.527-
2(c) or
    (2) Transfers of unexpended amounts to a political organization 
described in section 527(e)(1).
    (e) Excess funds. Excess funds held by a newsletter fund which has 
ceased to engage in the preparation and circulation of the newsletter 
are treated as expended for the personal use of the individual who 
established and maintained such fund. However, to the extent such excess 
funds are within a reasonable period of time:
    (1) Contributed to or for the use of any organization described in 
paragraph (1) or (2) of section 509(a) which is exempt from taxation 
under section 501(a),
    (2) Deposited in the general fund of the U.S. Treasury or in the 
general fund of any State or local government (including the District of 
Columbia), or
    (3) Contributed to any other newsletter fund as described in 
paragraph (a) of this section,

the excess funds are not treated as expended for the personal use of 
such individual. In such a case the individual is not allowed a 
deduction under the Internal Revenue Code of 1954 for such contribution 
or deposit.

[T.D. 7744, 45 FR 85735, Dec. 30, 1980]