Tax Lawyer's Blog

As far as I can tell, the categorization by the IRS of sex change operations as elective cosmetic surgery doesn’t effect any of my clients. But if Rhiannon O’Donnabhain prevails in tax court and gets to deduct as a medical expense the $25,000 he paid to become a woman, I predict the flood gates will open and taxpayers will try to deduct billions of dollars of surgery costs that were formerly considered cosmetic and, therefore, not deductible.

The case was heard in United States Tax Court on Thursday.  The Judge’s decision is pending.

Jennifer Levi of the Gay and Lesbian Advocates Group that is representing O”Donnabhain in the law suit says the costs of the operation should be deductible because,

[G]ender-identity disorder is a recognized mental disorder that is generally treated with hormones and surgery, the costs are legitimate medical deductions. Every mental health textbook and medical dictionary recognizes the legitimacy of both the diagnosis and course of treatment.

Government lawyers refused to comment on a pending case but they cited the tax code and argued in a prior, similar case that,

[C]osmetic surgery or similar procedures are deductible only when they are needed to improve a congenital abnormality, an accident or trauma, or a disfiguring disease.

Generally, expenditures for mental health care are deductible. So, I believe the question will turn on whether or not O’Donnabhain was advised by a license psychiatrist to get the surgery or just decided to do it on his own.

I can see it now. People getting doctor’s letters prescribing everything from buttocks augmentation to gynecomastia (male breast tissue reduction) just to get their tax deductions. 

Most people I know hate something about their physical appearance. It has to be psychologically disturbing to have twelve chins or a 50 inch waistline. So it’s hard for me to see how, if O’Donnabhain wins this case, expenditures made by future taxpayers for surgery that makes them feel better about themselves could be denied deductibility.

Let me know what you think. 

Should the government be in the business of subsidizing someone’s sex change operation?

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