Cal. Code Regs. tit. 18 § 24405

Current through Register 2024 Notice Reg. No. 52, December 27, 2024

Section 24405 - Cooperative or Mutual Associations Not Principally Engaged in Selling Tangible Personal Property

Effective September 7, 1955, cooperative or mutual associations are not permitted a deduction under Section 24405 if their income is principally derived from the sale in the regular course of business of tangible personal property other than agricultural products. Thus, if a cooperative or mutual association is organized and operated for the purpose of selling to its members furniture, household appliances, ice, or other similar products none of its income may be deducted under this section. Water sold for domestic purposes is tangible personal property, but if used for irrigation purposes it is not such property. Therefore, if the primary purpose of a mutual water company is to furnish water to its members for domestic purposes no deduction for income derived from such sales is allowed under Section 24404. However, if the primary purpose of a mutual water company is to furnish water for irrigation purposes and incidental income is derived from furnishing water for domestic purposes to members the income derived from such incidental sales may be deducted. Effective for income years beginning after December 31, 1956, regardless of the purpose for which it is used, water is not considered as being tangible personal property.

For the purpose of Section 24404 electricity is not tangible personal property.

Cal. Code Regs. Tit. 18, § 24405

1. New section filed 9-3-82; effective thirtieth day thereafter (Register 82, No. 37). For prior history of former Section 24404-24405, see Register 71, No. 2.

Note: Authority cited: Section 26422, Revenue and Taxation Code. Reference: Section 24505, Revenue and Taxation Code.

1. New section filed 9-3-82; effective thirtieth day thereafter (Register 82, No. 37). For prior history of former Section 24404-24405, see Register 71, No. 2.