Tax Court hears case on deductibility of sex change operation

A potentially groundbreaking case is underway in the U.S. Tax Court in Boston where a former man is arguing that the medical expenses relating to her sex change operation should be allowed as a medical deduction on Schedule A of her income tax return.

The defendant, Rhiannon O'Donnabhain, has indicated that she had been diagnosed with a disease known as gender identity disorder, and her doctor recommended the sex change surgery, claiming it was a medical necessity. Her psychologist agreed with the recommendation.

O'Donnabhain had surgery to remove male genitals and augment breasts. "The only way for me to be the real person I was in my mind was to have the surgery," said O'Donnabhain.

The IRS is arguing that the procedure represents cosmetic surgery and is therefore not deductible. "The surgery was the petitioner's choice so it was a personal expense," explained Maureen O'Brien, counsel for the IRS. In particular, O'Brien noted, "The petitioner's breast augmentation as a result of breast implants was clearly cosmetic; the petitioner already had breast development as a result of hormone therapy."

The Internal Revenue Code only allows a deduction for cosmetic surgery under certain circumstances:

Section 213(d)(9)(A): The term “medical care” does not include cosmetic surgery or other similar procedures, unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease.

O'Donnabhain is represented by the Boston-based Gay & Lesbian Advocates & Defenders. Jennifer Levi, one of the attorneys involved in the case, argues that the surgery costs should be allowed as medical deductions because gender-identity disorder is a recognized mental disorder that is generally treated with hormones and surgery.

O'Donnabhain is a former member of the U.S. Coast Guard and is the father of three children.