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IRS to Allow Deduction for SRS/GID

PostPosted: Thu Nov 03, 2011 5:06 pm
by Wizard CaT
Read this on Going Concern (kind of an accountant tabloid) and figured it would be interesting for most people here. FYI for those not familiar with taxes (which is everyone *else* on the board) Medical deductions are subject to a floor: 7.5% of AGI. Also currently the IRS only accepted the ruling on this case, but the "Action on Decision" is the IRS saying they will agree with the Tax Court, but that the case should not be counted on as tax law. ... -disorder/

Going Concern wrote:When nature makes a mistake, it can be expensive to repair. Rhiannon O’Donnabhain long suspected that nature had mistakenly assigned him to the wrong team, and after growing up male, fathering three children, and getting divorced, looked into fixing that. A diagnosis of Gender Identity Disorder (GID) was reached, and the process began.

There was a lot involved. The Tax Court says the process included:

- 20 weekly individual therapy sessions.
- Hormone therapy
- facial surgery
- genital surgical sex reassignment
- breast augmentation surgery

This process continued under the watchful (but not free) observation of a therapist.

Now female, O’Donnabhain deducted $21,741 in medical expenses related to the reassignment on her 2001 return. The IRS objected, but the Tax Court upheld her medical deductions for all but the breast augmentation (they said that was cosmetic, not medical).

Tax Court wrote:The expert testimony also establishes that given (1) the risks, pain, and extensive rehabilitation associated with sex reassignment surgery, (2) the stigma encountered by persons who change their gender role and appearance in society, and (3) the expert-backed but commonsense point that the desire of a genetic male to have his genitals removed requires an explanation beyond mere dissatisfaction with appearance (such as GID or psychosis), petitioner would not have undergone hormone therapy and sex reassignment surgery except in an effort to alleviate the distress and suffering attendant to GID. Respondent’s contention that petitioner undertook the surgery and hormone treatments to improve appearance is at best a superficial characterization of the circumstances that is thoroughly rebutted by the medical evidence.

Now the IRS has changed its mind. In an Action on Decision published yesterday the IRS said that they will follow the Tax Court’s decision and will allow gender reassignment costs as a medical deduction for diagnosed GID.

Unfortunately, there still is no known medical fix for Accountants Personality Disorder. Medicine remains helpless to treat the many rock stars trapped in CPA personalities.

Re: IRS to Allow Deduction for SRS/GID

PostPosted: Fri Nov 25, 2011 2:56 pm
by Mitsukara
Cool! My understanding of tax law is very sketchy, but I am doubly glad to see this sort of thing happening considering that future events such as these will affect me in the future.