Joseph Morrissey is a law professor at Stetson. He is also a gay male and a willing fighter for equality for gay couples. His case is Morrissey v. United States, 2017 WL 4229063, a decision by the 11th Circuit.
The issue is whether or not Morrissey can deduct the costs he incurred in producing a natural child with his same-sex partner. “This is a tax case. Fear not, keep reading” is the exact language used by the 11th Circuit at the beginning of its published opinion. Is this respectful? Is it joking? What is it? I have never seen such language — although as a tax professor I applaud the court for enticing folks to read a tax opinion. Yes, we should read more tax opinions.
Under IRC §213 a taxpayer can deduct all expenditures made for medical care in excess of 10% of AGI. Medical care is defined as amounts paid for “the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.”
Morrissey claimed that the expenses he incurred to obtain eggs from females and the expenses he paid for surrogacy (i.e, to a woman who would agree to carry his child to term) were expenses paid to affect a “structure or function of the body” — in particular his reproductive function.
The Court of Appeals, on a statutory construction rationale, said that the expenses were not incurred to affect HIS body. Therefore, no deduction.
He also made equal protection claims. First he claimed that the decision burdened his fundamental right to procreate. But the court quickly held that there was no right to procreate outside of the traditional method of procreation. That is, there is no fundamental right to use egg donors and surrogates as part of the procreational process.
Next he claimed that the decision by the IRS violated his equal protection rights as a gay man — – i.e., that he was the victim of sexual orientation discrimination. But the IRS countered that no deduction would have been allowed to a heterosexual couple who had used a surrogate. And the court agreed with that argument.
Quick point here: There have been cases involving heterosexual couples who tried to deduct surrogacy costs. The IRS has never officially lost such a case. But the two prime cases were settled. So we don’t really know how surrogacy or IVF costs are treated by the IRS. Just thinking out loud here. . .
And food for thought: What about a lesbian couple in which one is the egg donor and the other is the birth mother? What costs can be deducted? Any possibility of sex discrimination?