O'Donnabhain v. Comm'r of Internal Revenue

• Decision Date: 02 February 2010
• Docket Number: No. 6402–06.,6402–06.
• Citation: 134 T.C. 34,134 T.C. No. 4
• Parties: Rhiannon G. O'DONNABHAIN, Petitioner v. COMMISSIONER of INTERNAL REVENUE, Respondent.
• Court: U.S. Tax Court

134 T.C. 34

134 T.C. No. 4

Rhiannon G. O'DONNABHAIN, Petitioner

v.COMMISSIONER of INTERNAL REVENUE, Respondent.

No. 6402–06.

United States Tax Court.

Feb. 2, 2010.

In 1997, P, born a genetic male, was diagnosed with gender identity disorder, a condition recognized in medical reference texts, in which an individual experiences persistent psychological discomfort concerning his or her anatomical gender. Medical professionals who treat gender identity disorder prescribe for its treatment in genetic males, depending on the severity of the condition, (i) administration of feminizing hormones; (ii) living as a female in public; and (iii) after at least a year of living as a female, surgical modification of the genitals and, in some circumstances, breasts to resemble those of a female (sex reassignment surgery). Pursuant to this treatment regimen, P was prescribed feminizing hormones in 1997 and continued to take them through 2001. In 2000, after plastic surgery to feminize facial features, P began presenting full time in public as a female. In 2001 P underwent sex reassignment surgery, including breast augmentation surgery. P claimed a medical expense deduction under sec. 213, I.R.C., for the cost of the surgeries, transportation and other related expenses, and feminizing hormones, for the taxable year 2001. R disallowed the deduction.

Held: P's gender identity disorder is a “disease” within the meaning of sec. 213(d)(1)(A) and (9)(B), I.R.C.

Held, further, P's hormone therapy and sex reassignment surgery were “for the * * * treatment * * * of” and “[treated]” disease within the meaning of sec. 213(d)(1)(A) and (9)(B), I.R.C., respectively, and consequently the procedures are not “cosmetic surgery” that is excluded from the definition of “medical care” by sec. 213(d)(9)(A), I.R.C., and instead the amounts paid for the procedures are expenses for “medical care” that are deductible pursuant to sec. 213(a), I.R.C.

Held, further, P's breast augmentation surgery was “directed at improving * * * [her] appearance” and she has not shown that the surgery either “meaningfully [promoted] the proper function of the body” or “[treated] * * * disease” within the meaning of sec. 213(d)(9)(B), I.R.C. Accordingly, the breast augmentation surgery is “cosmetic surgery” within the meaning of sec. 213(d)(9)(B), I.R.C., that is excluded from the definition of deductible “medical care” by sec. 213(d)(9)(A), I.R.C.

Karen L. Loewy, Bennett H. Klein, Jennifer L. Levi, William E. Halmkin, David J. Nagle, and Amy E. Sheridan, for petitioner.

Mary P. Hamilton, John R. Mikalchus, Erika B. Cormier, and Molly H. Donohue, for respondent.

GALE, Judge.

Respondent determined a deficiency of $5,679 in petitioner's Federal income tax for 2001. After concessions,¹ the issue for decision is whether petitioner may deduct as a medical care expense under section 213 ² amounts paid in 2001 for hormone therapy, sEX REASSIGNMENT SURGERY, and breast augmentation surgery that petitioner contends were incurred in connection with a condition known as gender identity disorder.

FINDINGS OF FACT

Many of the facts have been stipulated, and the stipulated facts and attached exhibits are incorporated in our findings by this reference. The parties have stipulated that this case is appealable to the U.S. Court of Appeals for the First Circuit.

I. Petitioner's Background

Rhiannon G. O'Donnabhain (petitioner) was born a genetic male with unambiguous male genitalia. However, she ³ was uncomfortable in the male gender role from childhood and first wore women's clothing secretly around age 10. Her discomfort regarding her gender intensified in adolescence, and she continued to dress in women's clothing secretly.

As an adult, petitioner earned a degree in civil engineering, served on active duty with the U.S. Coast Guard, found employment at an engineering firm, married, and fathered three children. However, her discomfort with her gender persisted. She felt that she was a female trapped in a male body, and she continued to secretly wear women's clothing.

Petitioner's marriage ended after more than 20 years. After separating from her spouse in 1992, petitioner's feelings that she wanted to be female intensified and grew more persistent.⁴

II. Petitioner's Psychotherapy and Diagnosis

By mid–1996 petitioner's discomfort with her male gender role and desire to be female intensified to the point that she sought out a psychotherapist to address them. After investigating referrals, petitioner contacted Diane Ellaborn (Ms. Ellaborn), a licensed independent clinical social worker (LICSW) and psychotherapist, and commenced psychotherapy sessions in August 1996.

Although not a medical doctor, Ms. Ellaborn had a master's degree in social work and as an LICSW was authorized under Massachusetts law to diagnose and treat psychiatric illnesses. She had specialized training in the diagnosis and treatment of gender-related disorders.

During petitioner's psychotherapy Ms. Ellaborn learned of petitioner's cross-dressing history and of her longstanding belief that she was really female despite her male body. Ms. Ellaborn observed that petitioner was very sad and anxious, had very low self-esteem, had limited social interactions, and was obsessed with issues concerning the incongruence between her perceived gender and her anatomical sex.

In early 1997, after approximately 20 weekly individual therapy sessions, Ms. Ellaborn's diagnosis was that petitioner was a transsexual suffering from severe gender identity disorder (GID), a condition listed in the Diagnostic and Statistical Manual of Mental Disorders (4th ed.2000 text revision) (DSM–IVTR), published by the American Psychiatric Association. The DSMIV–TR states that a diagnosis of GID is indicated where an individual exhibits (1) a strong and persistent desire to be, or belief that he or she is, the other sex; (2) persistent discomfort with his or her anatomical sex, including a preoccupation with getting rid of primary or secondary sex characteristics; (3) an absence of any physical intersex (hermaphroditic) condition; and (4) clinically significant distress or impairment in social, occupational, or other important areas of functioning as a result of the discomfort arising from the perceived incongruence between anatomical sex and perceived gender identity.⁵ See DSM–IV–TR at 581. Under the classification system of the DSM–IV–TR, a severity modifier—mild, moderate, or severe—may be added to any diagnosis. ⁶ THE TERM “Transsexualism” is currently used in the dsm–iv–TR TO describe GID symptoms that are severe or profound.⁷

Both the DSM–IV–TR and its predecessor the DSM–IV contain the following “Cautionary Statement”:

The purpose of DSM–IV is to provide clear descriptions of diagnostic categories in order to enable clinicians and investigators to diagnose, communicate about, study, and treat people with various mental disorders. It is to be understood that inclusion here, for clinical and research purposes, of a diagnostic category * * * does not imply that the condition meets legal or other non-medical criteria for what constitutes mental disease, mental disorder, or mental disability. * * *

III. Treatment of GID

The World Professional Association for Transgender Health (WPATH), formerly known as the Harry Benjamin International Gender Dysphoria Association, Inc., is an association of medical, surgical, and mental health professionals specializing in the understanding and treatment of GID.⁸ WPATH publishes “Standards of Care” for the treatment of GID (hereinafter Benjamin standards of care or Benjamin standards). The Benjamin standards of care were originally approved in 1979 and have undergone six revisions through February 2001.

Summarized, the Benjamin standards of care prescribe a “triadic” treatment sequence for individuals diagnosed with GID consisting of (1) hormonal sex reassignment; i.e., the administration of cross-gender hormones to effect changes in physical appearance to more closely resemble the opposite sex; ⁹ (2) the “real-life” experience (wherein the individual undertakes a trial period of living full time in society as a member of the opposite sex); and (3) sex reassignment surgery, consisting of genital sex reassignment and/or nongenital sex reassignment, more fully described as follows:

Genital surgical sex reassignment refers to surgery of the genitalia and/or breasts performed for the purpose of altering the morphology in order to approximate the physical appearance of the genetically other esx [sic] in persons diagnosed as gender dysphoric. * * * Non-genital surgical sex reassignment refers to any and all other surgical procedures of non-genital, or non-breast, sites (nose, throat, chin, cheeks, hips, etc.) conducted for the purpose of effecting a more masculine appearance in a genetic female or for the purpose of effecting a more feminine appearance in a genetic male in the absence of identifiable pathology which would warrant such surgery regardless of the patient's genetic sex (facial injuries, hermaphroditism, etc.).

Under the Benjamin standards, an individual must have the recommendation of a licensed psychotherapist to obtain hormonal or surgical sex reassignment. Hormonal sex reassignment requires the recommendation of one psychotherapist and surgical sex reassignment requires the recommendations of two.¹⁰ The recommending psychotherapist should have diagnostic evidence for transsexualism for a period of at least 2 years, independent of the patient's claims.

The Benjamin standards state that hormonal sex reassignment should precede surgical sex reassignment because the patient's degree of satisfaction with hormone therapy “may indicate or contraindicate later surgical sex reassignment.” The Benjamin standards further state that “Genital sex reassignment shall be preceded by a period of at least 12 months during which time the patient lives full-time in the social role of the genetically other sex.”...