Can Charitable Tax Exemption Save 23andMe?
That's the plan, but there are a whole lot of thorny issues to be resolved.
About a week or ten days ago, a bankruptcy judge in the eastern district of Missouri approved1 a reorganization plan that is designed to save 23andMe from going completely out of business and spilling all of its customers’ private and sensitive genetic data all over the place. The plan2 calls for a distribution of 23andMe’s assets to a wholly owned subsidiary followed by a sale of the equity in the resulting “new” 23andMe to a nonprofit formed and exclusively funded by 23andMe’s co-founder, CEO, and former Board Chair, Anne Wojcicki. The plan – set out in a court approved asset purchase agreement -- requires the nonprofit to seek federal tax exemption as a 501(c)(3) as soon as possible after closing. There is an implicit acknowledgement that the nonprofit may not qualify. Apparently, the deal will go forward even if it doesn’t get a favorable determination letter. This should get interesting because there are a lot of difficult tax exemption issues that will need to be addressed.
