Tax Court allows deduction for sex-change operation

The U.S. Tax Court in Boston ruled in favor of a plaintiff who claimed approximately $5,000 in medical deductions for expenses relating to her sex-change operation. The court ruled last week that the treatment she received stemmed from a disease and was not classified as cosmetic, thereby making the medical care tax deductible, according to court documents. 

“The tax court has spoken for my community and has supported my community by saying that this is a proper medical deduction, much the same as an appendectomy or open heart surgery,” Rhiannon O’Donnabhain said in an Associated Press report. “It was a proper medical deduction, and it certainly is not cosmetic surgery as the IRS contended.”
 
O’Donnabhain, who was born male, was diagnosed in 1997 with gender-identity disorder. Her doctors recommended sex-change surgery, claiming it was a medical necessity. O’Donnabhain underwent hormone therapy, sex-reassignment surgery, and breast augmentation surgery. Under Section 213 of the Internal Revenue Code, O’Donnabhain claimed a medical expense deduction for the cost of the surgeries, transportation, feminizing hormones, and other related expenses for the taxable year 2001.
 
O’Donnabhain received her tax refund in June 2002, but was audited six months later, according to the Boston-based Gay & Lesbian Advocates & Defenders (GLAD), a civil rights advocacy group. O’Donnabhain contacted GLAD, whose attorneys assisted her in appealing the tax examiner’s decision. The matter progressed to Tax Court, where a trial took place in 2007.
 
Although the Tax Court ruled that O’Donnabhain’s hormone therapy and sex-reassignment surgery were for the treatment of a disease and should be considered medical care under Section 213(d)(9)(A), the Court ruled that her breast augmentation surgery was “directed at improving [her] appearance” and she has not shown that the surgery either “meaningfully [promoted] the proper function of the body” or “[treated] the disease,” according to court documents.

 

Related articles:

You may like these other stories...

School tax breaks get House support as Democrats objectRichard Rubin of Bloomberg reported that the House of Representatives on Thursday voted to expand and simplify tax breaks for education as Republicans continue to pass...
Many senior US tax professionals believe that a streamlined audit process will be the top benefit resulting from the IRS Transfer Pricing Audit Roadmap, a new toolkit organized around a notional 24-month audit timeline,...
Tax accounting to be simplified for money-market fundsThe US Securities and Exchange Commission (SEC) voted 3-2 on Wednesday for sweeping changes to institutional money-market funds, Emily Chasan, senior editor of...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.