Orange County'S Credit Union

“Orange county's credit union holds funds in escrow related to the mortgage loans outstanding to pay for real estate taxes and homeowners insurance on behalf of its members.”

“Orange county's credit union (the credit union) is a tax-exempt entity under internal revenue code (irc) 501(c)(14), but may be subject to taxation on income unrelated to the credit union's exempt function. State-chartered credit unions should pay income tax on certain types of net taxable income from activities that taxing authorities consider unrelated to the purpose for which the credit union was granted nontaxable status. The credit union has filed unrelated business income tax (ubit) returns (990-t) in the past, which has resulted in no income taxes paid for the years ended december 31, 2024 or 2023. In addition, there were no material uncertain tax positions at december 31, 2024 and 2023. The credit union recognizes the tax benefit from uncertain tax positions, if any, only if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The credit union recognizes interest accrued and penalties related to unrecognized tax benefits as an administrative expense. The credit union had no unrecognized tax benefits at december 31, 2024 or 2023. During the years ended december 31, 2024 and 2023, the credit union recognized no interest and penalties. A tax-exempt organization information return, unrelated business income tax return, and california income tax return are filed annually with the applicable tax jurisdictions. As of december 31, 2024, the credit union had net operating loss carryforwards available to offset approximately $6.4 million of future unrelated business income taxes. The carryforwards expire in approximately 10 to 20 years. The tax asset representing the value of the net operating loss carryforwards has been offset by a full valuation allowance as of december 31, 2024 and 2023. There is uncertainty as to whether the credit union's deferred tax assets will become available to offset future tax liabilities. While there is the potential for some of the deferred tax asset to be utilized prospectively as of december 31, 2024, the amount is immaterial.”