Credit unions have either state or federal charters.
Federal-chartered credit unions are not taxable under the California Revenue and Taxation Code. That section provides for the exemption from tax of state-chartered credit unions. They were taxed as financial corporations. Prior to income year 1988, income from investments in bonds, savings deposits, etc., with non-members was held not deductible. The courts looked at the transaction to determine if the income was member or non- member income.