No Medical Deduction for IVF Expenses; I.R.C. § 213 Doesn’t Apply for All Surrogacy Situations
Under I.R.C. § 213, a deduction is available for medical services provided to a taxpayer, his/her spouse, and dependents. But this doesn’t mean that all IVF procedures and other pregnancy-related costs are covered simply because the taxpayer’s dependent is ultimately conceived by virtue of the procedures…
Joseph Morrissey and his partner decided to try to have children through in vitro fertilization. Between 2010 and 2014, Morrissey paid for seven IVF procedures, three egg donors, three gestational surrogates and two fertility specialists, at a cost of approximately $100,000. Mr. Morrissey sought to deduct under I.R.C. § 213 the costs associated with identification, retention, compensation and care of the egg donor and gestational surrogate but was denied the deduction by the IRS because I.R.C. § 213 deduction “must be for Medical Services provided to the taxpayer, his spouse, or his dependent.”
Morrissey asserted that all of the IVF-related expenses that he incurred—including the costs attributable to the identification, retention, compensation, and care of the women who served as the egg donor and surrogate—were made for the purpose of affecting his body’s reproductive function. The court held that these costs attributable to the identification, retention, compensation and care of the egg donor and surrogate weren’t incurred ‘for the purpose of affecting any …function of [Mr. Morrissey’s] body,” and, for that reason, cannot be deducted as “medical care” expenses under I.R.C. § 213. Morrissey v. United States, No. 17-10685, 2017 BL 337928 (11th Cir. Sept. 25, 2017).
Post by: Jillian Mastroianni
How Trump’s Tax Proposal Affects You
Trump’s new tax proposal makes some changes that could affect your estate planning.
- Both the estate and generation-skipping taxes get the boot.
- What about stepped up basis under I.R.C. § 1014? R.C. § 1014 provides that, for most property, a decedent’s beneficiaries receive a step up in basis to fair market value at the decedent’s date of death. Thus far, the proposed changes don’t affect I.R.C. §1014.
- Regarding retirement, the proposal states, “Tax reform will aim to maintain or raise retirement plan participation of workers and the resources available for retirement.” The proposal does not address questions relating to the possible elimination of stretch inherited IRAs.
Read more at Bloomberg Law Tax Management Weekly Report, October 2, 2017, “Big Six Tax Framework: 5 Policy Decisions” (subscription required).
Post by: Jillian Mastroianni
Proposed Minority Discount Regulations Bite the Dust
Practitioners had been worried that the Section 2704 proposed regulations were going to affect minority discount valuations for gift and estate tax purposes. Worry no more.The U.S. Department of the Treasury’s Second Report to the President on Identifying and Reducing Tax Regulatory Burdens, Executive Order 13789, October 2, 2017, notes that the main difficulty with the proposed regulations was that requirements were unclear and their effect was uncertain. Expect a withdrawal of the proposed regulations in the Federal Register.
Post by: Jillian Mastroianni