ALEXANDRIA, Va. – NCUA told Houston Musicians FCU loans of more than $50,000 to buy musical instruments are considered member business loans and must comply with its MBL rules and regulations.
The NCUA ruling, in a new legal opinion letter, comes despite the fact the Internal Revenue Service does not consider interest on such loans to be a business deduction. “We do not consider IRS treatment of an expense to be determinative of whether a loan qualifies for MBL treatment under NCUA Part 723,” the agency said in the legal opinion, issued to Bob McGrew, manager of the Houston credit union. “Similarly, the fact that an item may be purchased for a non-business purpose is not controlling.”
“It is our view the instrument loan provides a means for your professional musician members to purchase a musical instrument for use in their trades as paid musicians,” said NCUA. “The musical instrument is a tool of the musician’s trade and is acquired for use in a business capacity.”
