Provision of Sperm as a Charitable Activity

Originally Published on forbes.com on September 5th,2011

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This article in the New York Times, 1 Sperm Donor, 150 Brothers and Sisters brought to mind my candidate for the all time funniest tax court decision – Free Fertility Foundation v. Com 135 TC 2.  I did a post on it titled Tax Court Crafts Ultimate Pick-up Line.  Here is the gist of it:

  I had noted the case’s precursor back when I was not tax bloggingand might have gotten around to it.  PLR 200736307 and related PLR 200737044 revoked the exempt status of a nameless organizationwhose charitable purpose was the provision of donated sperm to worthy women.  The IRS (they don’t say how) determined that 88% of said sperm, if you will excuse the expression, came from the same donor, who along with his father founded and ran the organization.  The canned language of one of the rulings invites the organizers to apply to the Tax Court for declaratory judgment. Apparently they did.  

The Tax Court went along with the IRS on this one.  It boils down to his exempt purpose not benefiting a broad enough class of people.  The petitionerclaimed it was a very broad class indeed namely all women in the world capable of  bearing children.  The Tax Court thought the class somewhat more limited – namely women who want to bear his children.  In prefacing their decision they did however make the following observation : 

“The free provision of sperm may, under appropriate circumstances, be a charitable activity.”

The Times article and the Free Fertility case have inspired me to imagine afuture dystopia dominated by women disinclined to collect sperm in the traditional manner and men who prefer to discharge their reproductive duty in private.  Maybe my classmate, science fiction author John Sundman will tackle it.