IRS Sued Over Sex-Change Deduction

[AnthonyL]

BOSTON - After a tormented existence as a father, a husband, a Coast Guardsman and a construction worker, a 57-year-old suburban Boston man underwent a sex-change operation. Then she wrote off the $25,000 in medical expenses on her taxes.

But the IRS disallowed the deduction — ruling the procedure was cosmetic, not a medical necessity — in a potentially precedent-setting dispute now before the U.S. Tax Court.

Read More Here (http://www.tgirltalk.com/forums/vbnews.php?do=viewarticle&artid=81&title=woman-suing-irs-for-sex-change-deduction-tax-tactics)

[Ecstatic]

Arrgh! It seems for every step forward, there's two steps back. Not really, I do think progress is actually happening pretty rapidly by cultural and social standards, but decisions like this are preposterous, especially coming from the IRS. Let's see what the tax court does. A few years ago the IRS declined the business deduction for breast implants for a stripper, who fought the decision in court. The judge basically took one look at the woman (who had something like 48GGG boobs) and ruled that no one would choose breasts so huge for any purpose other than business and allowed the deduction.

[kalina]

Hmmmm... part of me feels for the Rhiannon, but part of me says what a lunkhead she must be if she didn't consult with a CPA regarding the rules for legal tax deductions. The truth is ANYONE can claim deductions for just about anything but eventually your tax form may be red flagged by the IRS if you exceed a certain amount in deductions.

You can try this experiment if you wish: keep your receipt for a box of bubblegum or cigarettes and claim it as a medical expense on your tax form. If it's something like $50, most likely the IRS will never see it. If you claim $5000 like Rhiannon did, well, now they'll look more closely at your return. Anyone who's ever worked in a big company and had to fill out time and expense reports knows this. Little things that don't affect the bottom line are ignored. Big things that do get closer scrutiny.

There are things that you could legitimately claim as deductions, such as breast forms if you had a mastectomy. Breast implants are a gray area and I'm surprised at the stripper ruling.

I own a business and used to pay $380 per year to my CPA to go through all my expenses with me to see what can and cannot be deducted. If you don't have $380 per year for this, you can do what I recently did and pay $100 to a trans-friendly CPA friend to do the same stuff for you. That's $20 per form. Rhiannon would've paid just $40 for the same kind of friend to do her taxes and tell her that what she was doing would be red flagged by the IRS.