In Magdalin v. Commissioner, the First Circuit Court of Appeals affirmed a decision from the United States Tax Court holding that expenses incurred in connection with fathering two children using in vitro fertilization were nondeductible. The petitioner is the father of twin boys which were born through natural processes and without the use of in vitro fertilization. After the twins’ birth, the petitioner became the father of two more children. Those children were born using the in vitro process with two different women. The petitioner deducted $34,050 for 2004 and $28,230 in 2005 for medical expenses relating to the in vitro procedures.
The court, affirming the tax court, held that the expenses were nondeductible because the expenses were not incurred to treat an underlying medical condition suffered by the taxpayer. The taxpayer stipulated that he had two children which had been produced through natural process in conjunction with a woman who was his wife at the time. Further, the procedures were not conducted for the purpose of affecting the taxpayer’s own structure or function of his own body. Rather, it was the women who were the gestational carriers whose bodies were affected.
A question left unanswered by the tax court was whether legal fees and fees paid on behalf of the gestational carriers would have been deductible in the presecence of an underlying medical condition. However, in a footnote, the tax court did address Priv. Ltr. Rul.2003-18-017 (Jan. 9, 2003) which addressed the deductibility of egg donor fees including legal fees. The court stated that under section 6110(k)(3), PLR’s lack precedential status but “do reveal the interpretation put upon the statute by the agency charged with the responsibility of administering the revenue laws.” Further, the court IRS stated that although IRS publications are not authoritative sources of tax law, Publication 502, Medical and Dental Expenses (2008), provides that procedures such as in vitro fertilization are deductible under section 213 if such expenses are incurred “to overcome an inability to have children.”