Could the IRS Deny Tax-Exempt Status to Religious Schools That Discriminate on the Basis of Sexual Orientation?

No, not at this time. In my opinion, the courts would allow the Internal Revenue Service to deny tax-exempt status to religious schools that discriminate on the basis of sexual orientation only if Congress made such discrimination in education illegal. If Congress does that, then of course no school that engages in acts of illegal discrimination should be entitled to claim tax-exempt status.