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Living Faith, Inc. v. Commissioner

950 F.2d 365 (1991)

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Living Faith, Inc. v. Commissioner

United States Court of Appeals for the Seventh Circuit
950 F.2d 365 (1991)

Facts

Living Faith, Inc. (plaintiff) was a corporation established to adhere to the doctrines of the Seventh-Day Adventist Church. Living Faith’s primary function was the operation of vegetarian restaurants and health-food stores located in commercial shopping centers. Seventh-Day Adventists maintained that healthy living was an important aspect of their faith. Living Faith priced its food and products at market-appropriate levels. Living Faith also sent out promotional materials that mixed religious messaging, such as scriptural quotations, with commercial messaging, such as text touting its “world famous” restaurants. The majority of Living Faith’s revenue was generated through customer sales, and although Living Faith claimed to solicit substantial donations, it did not keep detailed records of those donations. Once a month, Living Faith provided free vegetarian meals. Living Faith also held free, weekly Bible study classes. Living Faith applied to the Internal Revenue Service (IRS) (defendant) for tax-exempt status under § 501(c)(3) of the Internal Revenue Code. The IRS denied the application, and the United States Tax Court upheld the IRS’s determination. Living Faith appealed the Tax Court’s ruling.

Rule of Law

Issue

Holding and Reasoning (Flaum, J.)

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Casebooks

Taxation of Nonprofit and Exempt Organizations

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