TaxProf Blog

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

Saturday, June 18, 2011

Tax Treatment of Gender Reassignment Surgery

Max V. Camp (J.D. 2012, Tulane) has published Note, O’Donnabhain v. Commissioner: Treatment Costs for Gender Identity Disorder Are Tax-Deductible Medical Expenses, 20 Tul. Law & Sexuality 133 (2011). Here is the Introduction:

After receiving therapy and feminizing hormones, Rhiannon G. O'Donnabhain chose to complete her gender-reassignment treatment by undergoing sex-reassignment surgery and breast augmentation. O'Donnabhain deducted as medical expenses the $21,741 she spent on feminizing hormones, sex-reassignment and breast augmentation surgeries, and related miscellaneous costs on her 2001 tax return. However, the respondent disallowed these deductions, and determined a tax deficiency of $5679.

O'Donnabhain was born a genetic male, earned a degree in civil engineering, married a woman, and raised three children. However, while growing up, petitioner experienced discomfort with gender and felt as though “she was a female trapped in a male body.” O'Donnabhain sought treatment with a licensed psychotherapist who diagnosed her with gender identity disorder (GID), a condition recognized in the Diagnostic and Statistic Manual of Mental Disorders (DSM). The petitioner successfully adapted to feminizing hormones and presenting herself as female in public; however, she still suffered anxiety over an incongruity between her male genitals and female gender identity and presentation. Her psychotherapist recommended sex-reassignment surgery for her to complete treatment for her gender reassignment process. The petitioner deducted these costs as medical deductions on her 2001 tax return, which the respondent disallowed. The petitioner filed a claim in the U.S. Tax Court for redetermination of tax deficiency. The Tax Court held GID is a disease for purposes of section 213 (medical deductions), hormone therapy and sex-reassignment surgery are considered appropriate treatment for GID, petitioner could deduct the costs of hormone therapy and sex-reassignment surgery as medical expenses on her 2001 tax return, but the costs of her breast augmentation surgery could not be deducted as a medical expense.

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It sounds more like a psychological rather than a physical condition.

Posted by: Woody | Jun 19, 2011 10:17:08 AM