Rev. & Tax. Code, § 24405

(a) In the case of other associations organized and operated in whole or in part on a cooperative or a mutual basis, all income resulting from or arising out of business activities for or with their members carried on by them or their agents, or when done on a nonprofit basis for or with nonmembers, shall be an allowable deduction. However, the deduction allowable under this section shall not apply to those cooperative or mutual associations whose income is principally derived from the sale in the regular course of business of tangible personal property other than water, agricultural products, or food sold at wholesale.

(b) For the purposes of subdivision (a), “food sold at wholesale” means a sale of food to anyone engaged in the business of selling food who holds a seller’s permit issued pursuant to Section 6066, and who at the time of purchasing the food either:

(1) Intends to sell it in the regular course of business.

(2) Is unable to ascertain at the time of purchase whether the food will be sold or used for some other purpose.

(c) For the purposes of subdivision (a), a credit union’s activities are “for or with” the members of the credit union if the activities involve the investment of surplus member savings capital in investments permitted for credit unions pursuant to Sections 14406, 14652, 14653, 14653.5, 14654, 14655, and 14656 of the Financial Code. “Surplus member savings capital” means the savings capital of credit union members which is in excess of the amount of savings capital which is loaned to members of the credit union. The term “savings capital” shall have the meaning set forth in subdivision (a) of Section 14400 of the Financial Code.

(d) For purposes of subdivision (a), “income resulting from or arising out of business activities for or with their members” includes, but is not limited to, all income resulting from reciprocal transactions with member credit unions.