Nearly 10 years ago, Rhiannon O’Donnabhain (then Robert Donovan) underwent sex-change and breast augmentation surgeries in order to complete her transformation from male to female for a Gender Identity Disorder (GID). She claimed the costs of the procedures on her tax return as a medical deduction, arguing that the procedures were medically necessary and not for cosmetic reasons. The Service disagreed and the matter went to Tax Court.
On February 2, 2010, the U.S. Tax Court ruled that treatment for gender identity disorder qualifies as a medical expense under the Tax Code, and is therefore deductible. However, the court considered the issues of O’Donnabhain’s transgender surgery and her breast augmentation surgery separately, with two different results. The transgender surgery was found to be part of O’Donnabhain’s treatment; in contrast, her breast augmentation surgery was found to be “cosmetic” and therefore, not deductible. Central to that argument was the fact that the hormone replacement therapy had already resulted in “normal breasts before her surgery.” Cosmetic surgery for non-medical purposes is not a deductible expense – and may even be taxable.
The U.S. Tax Court is not an arm of the IRS. It is a court of record established by Congress under Article I of the U.S. Constitution. The IRS defends its position as the defendant in a controversy brought by a taxpayer. In this matter, Ms. O’Donnabhain, was the taxpayer/petitioner and was represented by GLAD, the Gay & Lesbian Advocates & Defenders.
The opinion is a pretty good read (downloads as a pdf) if only for the numerous and lengthy concurring opinions.
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