Tax News of the Weird: Sperm Bank Fights for IRS Nonprofit Status

A sperm bank if California known as Free Fertility Foundation was denied tax exempt status by the Tax Court earlier this month. The nonprofit organization was formed to provide free sperm (“Sperm vials available immediately with no wait,” according to the company website) and make a “positive difference in the world” (founder’s words) so why did the IRS cut them a break?

The nonprofit founder William C. Naylor, Jr. is a software engineer, he hold more than 10 patents on various inventions. He incorporated Free Fertility Foundation, Inc. to provide sperm free of charge to woman in need. Curiously there’s only one donor listed in the catalog:

fwcn02453 – scientific researcher; mathematics and computer expert; vice-president of company; straight A student in university; chess champion in high school; awards for academic excellence and athletics while child; 6 ft 1 inch tall; Caucasian 3/4 English 1/4 Scottish. Sperm vials available immediately with no wait.

The sole sperm donor is Naylor himself, the foundation founder! But that’s not all, he continues his ultimate expression of narcissism with an extremely stringent application process. No one gets his sperm unless they are worthy, apparently. Preference is afforded to women “with better education” and “whose [family] members have a track record of contributing to their communities” (among many other restrictions and preferences). Because of this elitism 20 of the 433 applicants received sperm in 2004. In 2005, only 4 out of 386 women won the “privilege”.

So what was the Tax Court’s verdict on the sperm bank? They said one man’s sperm distributed to a small number of women doesn’t benefit the general public. Naylor made have said some nice things about “making the world a better place” (again, his real words) with his superior sperm, but the tax court is not convinced. I’ll close with their words:

While Naylor may believe that petitioner’s activities “make more of a positive difference to the world than all of the inventions and scientific discoveries that * * * [he]could ever create”, we are not convinced that the distribution of one man’s (i.e., Naylor’s) sperm to a small number of women, selected in the manner presented, promotes health or confers a public benefit.

So don't get any creative ideas on your tax deductions, guys. It didn't work for William C. Naylor, Jr. and it's not going to work for you!