Donating Profits Doesn't Warrant Tax Exemption: 9th Circ.

Law360, New York (May 19, 2015, 6:43 PM EDT) -- The Ninth Circuit on Monday refused to re-open planned online flower retailer Zagfly Inc.'s push to obtain tax-exempt status, siding with the U.S. Tax Court, which said the company's plans to donate its business profits to charitable organizations does not warrant the exemption.

In a short two-page memorandum, the appellate court said the Tax Court correctly applied a so-called operational test created by the U.S. Department of the Treasury when it determined that Zagfly wasn't entitled to the exemption because it wouldn't be exclusively operated for an exempt purpose.

"Zagfly's main activity would be to operate a website through which its...

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