Deductible Cosmetic Surgery and the Treatment of Transgenderism: An Analysis of the Medical Expense Deduction Post-O’Donnabhain

Abstract

In 2010, the United States Tax Court upheld a taxpayer’s deduction for medical expenses arising from gender-reassignment surgery. This article discusses the facts of the O’Donnabhain case and the Tax Court’s holding in light of relevant legislative history, and finds that a new layer of understanding now exists in the context of deductible cosmetic surgery: in a post-O’Donnabhain world, mental (not just physical) diseases may be treated through physical alterations to the body which constitute deductible cosmetic surgery. Based on the Tax Court’s opinion, we posit an algorithm for application of what we consider a fourth case-law created exception to the disallowance of deductions for cosmetic surgery.

Keywords: deductible medical expenses, cosmetic surgery, gender confusion