February 3, 2010 12:00 am

Sex Reassignment Surgery Is Tax Deductible

The Tax Court, in a lengthy opinion, for the first time has decided that gender identity disorder (GID) is a disease, so that treatment of that disease (reassignment surgery) is a deductible medical expense. The case involved a person born genetically as a male who spent over $20,000 to undergo sex reassignment and breast augmentation surgeries.

Deductible medical expenses include amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of a disease or for the purpose of affecting any structure or function of the body. Essentially, deductible medical costs are those paid to prevent or alleviate a physical or mental defect or illness. The court found that GID is a disease because it is recognized as a psychiatric impairment. Thus, treatment of GID by hormone treatments and surgery becomes a deductible medical expense.

However, the costs of breast augmentation are not deductible. The taxpayer’s breasts in this case were normal due to hormone treatment. Thus, the augmentation procedure was not undertaken for a medical purpose but rather to improve the taxpayer’s appearance, and there is a specific bar in the tax law for deducting the cost of cosmetic surgery in most situations.

Source: Rhiannon G. O’Donnabhain; 134 T.C. No. 4

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Tax Glossary

Constructive receipt

A tax rule that taxes income that is not received by you but that you may draw upon.

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