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Thursday, December 7, 2023
Courthouse News Service
Thursday, December 7, 2023 | Back issues
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Court OK’s Tax Breaks for Transgender Therapies

(CN) - A woman who underwent transgender surgery can deduct the cost of her vaginoplasty and sex hormone therapy from her taxes, the U.S. Tax Court ruled, but not the cost of her breast augmentation surgery.

After serving in the Coast Guard, marrying and fathering three children, Robert Donovan sought treatment for gender identity disorder, saying he felt like a woman trapped inside a man's body. He underwent sex hormone therapy, gender reassignment therapy and breast augmentation surgery to complete his transformation into Rhiannon O'Donnabhain.

When O'Donnabhain tried to claim $21,000 in deductions for unreimbursed medical expenses on her tax return, the Internal Revenue Service denied the deductions. It argued that the procedures were cosmetic and didn't treat a "disease" as defined by the tax code.

The IRS presented experts, including Dr. Park Dietz, a clinical professor of psychiatry and bio-behavioral sciences at the UCLA School of Medicine, who argued that gender identity disorder isn't a pathology and its diagnosis as a "disease" isn't widely accepted by the medical community. Dietz cited an alleged dearth of evidence on the efficacy of gender reassignment in treating the disorder.

The IRS relied on Dietz's definition of "disease" as a biological condition indicating the "abnormal structure or function of the body at the gross, microscopic, molecular, biochemical, or neuro-chemical levels."

But Judge Joseph Gale wasn't convinced.

"The evidence is clear that a substantial segment of the psychiatric profession has been persuaded of the advisability and efficacy of hormone therapy and sex reassignment surgery as treatment for [gender identity disorder], as have many courts," Gale wrote.

He cited the 7th Circuit's ruling in Maggert v. Hanks, in which Judge Richard Posner wrote: "The cure for the male transsexual consists not of psychiatric treatment designed to make the patient content with his biological sexual identity-that doesn't work-but of estrogen therapy designed to create the secondary sexual characteristics of a woman followed by the surgical removal of the genitals and the construction of a vagina-substitute out of penile tissue."

Gale denied reimbursement for the breast augmentation surgery, however, saying it wasn't a necessary treatment for gender identity disorder.

O'Donnabhain and her doctors had argued that the surgery was needed to alleviate her anxiety and fears of "not passing" as a woman.

But Gale noted that the sex-hormone therapy had already resulted in her developing "approximately B cup breasts with a very nice shape," according to the surgeon, thus making the surgery purely cosmetic.

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