TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, December 24, 2007

More on the Tax Consequences of Kidney Swaps

I previously argued that two women who donated their kidneys to each other's husband must report income on the exchange.  Tax Consequences of Kidney Donations (2/25/06). Jim Maule revisits the issue and rightly rejects a practitioner's view that income treatment could be avoided by assigning a nominal $1 value on each kidney.

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in all fairness, how likely is the IRS to establish a FMV of a kidney beyond $1? Or, more saliently, how likely is the agency to try?

Assigning $1 to each kidney is probably a "valid" tax-planning technique in that it will not be challenged (can you imagine the political ramifications if the tax man prevented a kidney swap of this sort?). as a matter of pure tax theory, I agree that each donor should include the FMV of the other kidney in gross income, but come on. . . .

Posted by: andy | Dec 24, 2007 8:11:20 PM