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mortgage principal payments made by petitioner in each of the
taxable years substantially exceeded the amount of the transfer
fees collected by petitioner during those years. For example,
the transfer fees received in 1989 and 1990, respectively, of
$333,350 and $345,050, compare with the mortgage principal
payments of $2,620,288 and $2,901,785 during those respective
years.
For accounting purposes, each transfer fee received by
petitioner is recorded as "Restricted Capital" in one or the
other of two capital accounts. Petitioner uses account No. 2810
(Capital-Membership Transfers) for transfer fees collected on
transfers of full and associate memberships, and account No. 2808
(Capital-Interest Transfers) for transfer fees collected on
transfers of GIM and COM memberships. After a mortgage principal
payment is made, an equivalent amount of the transfer fees in
accounts Nos. 2808 and 2810 is considered by petitioner as
"Unrestricted Capital". From time to time, the balances in
account Nos. 2808 and 2810 are transferred to account No. 2850
(Retained Earnings). These accounting transfers are not made
until the amount of mortgage principal paid by petitioner exceeds
the balances in accounts Nos. 2808 and 2810.
For financial reporting purposes, the transfer fees received
by petitioner during the year are reflected in the Statements of
Consolidated Members’ Equity as capital contributions of new
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Last modified: May 25, 2011