Case: IRS’s Denial of Exempt Status to Taxpayer Proper

Oct. 21, 2025, 7:39 PM UTC

The U.S. Tax Court held that the IRS’s determination that the taxpayer was not exempt from federal income tax under IRC §501(c)(3) was proper. The taxpayer, a nonprofit corporation, applied for tax-exempt status, describing itself as a family-owned organization that acts as a literary agency for its founder and pursues various commercial activities. The IRS denied the exemption, finding that the taxpayer was not organized or operated exclusively for exempt purposes and engaged in private inurement. The court held that the taxpayer failed the operational test for §501(c)(3) exemption because its primary activities were commercial ventures designed to earn a ...

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