It’s somehow appropriate that the IRS would release a private letter ruling regarding a double mastectomy in October (in case you’re not aware, it’s Breast Cancer Awareness month). Here are the facts:
Taxpayer had a double mastectomy. She later gave birth to a healthy baby. As a result of the mastectomy, she was not able to breastfeed her baby. To meet her baby’s nutritional needs, taxpayer bought infant formula. She then requested a ruling from the IRS to classify infant formula as a deductible medical expense on her tax return.
It’s worth noting that infant formula can be a significant expense. Estimates are all over the place but seem to settle in at about $40 per week for formula – or just over $2000 per year. If you require a special formula, such as Alimentum, you can easily double that estimate.
Generally, infant formula is not deductible as a medical expense. It’s nutrition and as far as the IRS is concerned, it’s no different than, say, an apple. That’s spelled out at section 262 of the Code which bars deductions for mere personal or living expenses.
However, section 213(d)(1)(A) of the Code allows you to claim an expense for “medical care” for amounts paid:
(A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body
“Medical care” may include special foods and beverages if they are prescribed to treat a specific illness and are in addition to your normal diet. But… And it’s a big but… If those special foods and beverages are consumed as substitutes for your normal diet, they aren’t deductible. This is why, for example, you can’t deduct your Jenny Craig meals (though certain diet program fees may be deductible).
So, using that criteria, the IRS found that, in this case, the infant formula was considered food and not a deductible medical expense as that term is defined under section 213.
Keep in mind that while private letter rulings are interesting in that they provide insight into where the IRS is going on a particular issue, they are not binding and are only applicable to the individual taxpayer. That said, do you think the IRS got this one right?
(Hat Tip: TaxProf Blog)