Tax Court: Gender Reassignment Was Deductible Medical Expense

In a case of first impression, R.G. O'Donnabhain v. Commissioner, Docket No. 6402-06, 134 TC No. 4, February 2, 2010, the Tax Court held that gender identity disorder (GID) was a disease under IRC Section 213, and that the cost of sex-reassignment surgery and hormone therapy were deductible medical expenses.

The taxpayer was born a male, was diagnosed with GID, and underwent treatment to become female.

The Court determined that GID was a disease under Section 213, in view of the seriousness of the case, the severity of the taxpayer's impairment as determined by mental health professionals, and other decisions that GID is a serious medical condition. The IRS argument that GID was solely a mental disorder, and not a disease, was rejected.

The Court held that there was no basis to accept the IRS argument. The IRS position was also contrary to cases in which mental disorders were treated as diseases, without regard to any organic or physiological cause. The taxpayer demonstrated that her sex reassignment surgery was medically necessary. The taxpayer's physician concluded that her GID was severe, and that sex reassignment surgery was medically necessary.
Further, hormone therapy and sex reassignment surgery treated the taxpayer's GID within the meaning of Section 213(d), and was not nondeductible cosmetic surgery. Hormone therapy and sex reassignment surgery are accepted prescribed treatments for those with GID.

It’s good to see GID treated as a legitimate disease. People suffering from the disorder should be able to deduct proper medical expenses, as long as the treatments are medically necessary and prescribed by a physician.