In vitro fertilization (IVF) is an expensive medical procedure whereby an egg is fertilized by sperm in a test tube or elsewhere outside the body. An IVF procedure can be tax deductible as a medical expense subject to the same limitations as any other medical expense. The limitation is that such medical expenses are tax deductible to the extent they exceed 10 percent of the taxpayer’s adjusted gross income (AGI). By way of example, if a taxpayer’s adjusted gross income is $100,000 and the taxpayers incurs $12,000 of medical expenses, the taxpayer is allowed a tax deduction of $2,000 ($12,000 less a $10,000 limitation (10% times $100,000 equals $10,000, the limitation).
However, taxpayers have not been entitled to the IVF medical deduction when a gestational surrogate was used. In such circumstances, the IRS and the courts found that a gestational surrogate does not impact the taxpayer, the taxpayer’s spouse or the body of the taxpayer’s dependent.
Let’s look at the case of Joseph Morrissey. Although he was not infertile, he argued that since he was a homosexual and could not conceive a child with his male partner, his sexual orientation rendered him practically infertile. Thus he argued that the IVF expenditures “cured” his own infertility. The court was not persuaded by his argument and agreed with the IRS that his IVF expenses were not tax deductible. The court looked at the language of the Internal Revenue Code which defines medical care as amounts paid “for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting . . . the body . . . for medical care of the taxpayer, his spouse or a dependent.” The expenses incurred did not affect Mr. Morrissey’s body.
Not to be denied his tax deduction, the taxpayer argued that the IRS discriminated against him due to his sexual orientation. The court found no basis in this argument since the courts have denied IVF deductions to heterosexuals who had a gestational surrogate arrangement in which another woman carried and delivered the baby for them.
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