Paul L. Caron

Thursday, November 12, 2009

More on The Tax Treatment of the Sale of Human Body Parts

Following up on last week's post, The Tax Treatment of Transfers of Human Body Parts: the Wall Street Journal covers the story in Tax Code Lags Growing Body-Parts Market, by Arden Dale:

Organs and blood products, eggs, sperm, breast milk and other goods from the human body are bought and sold in a market that has burgeoned over the past two decades. The tax code hasn't kept up.

The Internal Revenue Code has nothing specific to say about how, or even whether, taxpayers should report sales of their own body materials. Is there taxable income when a person sells an egg, a kidney or blood plasma? If so, should it be treated as ordinary income or capital gains?

"The fact that we don't have any settled tax treatment is currently a problem and looks to be a much bigger problem in the future," says Lisa Milot, an assistant professor of law at the University of Georgia School of Law. ...

Bridget Crawford, a professor at Pace University who teaches on tax issues, says lack of specifics in the tax code reflect the "fundamental question of whether the human body is a product, or if it is something so special that it can't be taxed." She believes tax law has looked the other way "to avoid dealing with the ugly reality that bodies are being commercialized."

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» Dissecting taxation of human body parts from Don't Mess With Taxes
Taxpayers often complain that the IRS seems to want an arm an leg from them. Well, it turns out that a pound of flesh (although usually much less) might one day literally be considered when it comes to taxation. "Transfers of human body materials are u... [Read More]

Tracked on Nov 14, 2009 11:40:14 PM


I've always wondered about surrogate mom's. Are they subject to self employment taxes. Do they receive 1099's? I think the answer is yes but is their any case law on it.

Posted by: Jody Padar | Nov 13, 2009 7:01:36 AM

Seems to me the only sticky point is assigning a cost basis to the product sold. Other than that, it's just another transaction.

Posted by: Juan R. Pollo | Nov 13, 2009 5:38:11 AM

The area of law is not unsettled. (There are other cases than the two mentioned above). It has been settled for more than 20 years. Ordinary income, no basis, and Form 1099 is required. The UGA (my alma matter) professor's writing appears to be an academic exercise only. The Code does not need to keep up because without a statutory exclusion, there is taxable income. There may be bioethic issues here, but not any in Federal income taxation. The notion that the decisions only decide the fate of the taxpayer before the court borders on the preposterous.

Posted by: Steven M Harris | Nov 13, 2009 3:31:43 AM

Check out Green v. Com'r and Garber v. U.S., for starters. What Congress doesn't bother to handle, courts find themselves answering.

Posted by: Jim Maule | Nov 12, 2009 1:17:51 PM