Generally I do not 'jump' to post Tax Court opinions. In fact, if you rely on my blog for tax news you may be the last one to know. But I could not hold this opinion for days on end.
Question for the Tax Court
The issue for decision is whether the taxpayer is entitled to deduct amounts paid to prostitutes and for medical texts and pornographic materials. (6).
The taxpayer has been an attorney for 40 years and specialized in tax law. (10). During 2004 and 2005 taxpayer frequented prostitutes in New York. (2). [He] did not visit these prostitutes as part of a course of therapy prescribed by his doctor. (2). [Although] he did keep track of these visits in a journal. The journal included the date, the name of the 'service provider', and the amount. (2).
For 2004, the taxpayer claimed medical expense deductions of $76,314 on his Schedule A. (3). Included in this amount was $65,934 for prostitutes; and $2,368 for medical books, magazines, videos, and pornographic material. (3).
For 2005, the taxpayer claimed medical expense deductions on his Schedule A of $49,023. (3). Included in this amount was $42,152 for prostitutes; and $5,005 for books, magazines, videos, and pornographic materials. (4).
The IRS disallowed the deductions for the cots of prostitutes and the costs of the books (3-4).
Medical Expense Deductions
Section 213(a) permits a deduction for a taxpayer's medical and dental expenses that were paid and not compensated for by insurance, to the extent the expenses exceed 7.5 percent of the taxpayer's adjusted gross income. (5). Section 213(d)(1) provides in pertinent part that the term "medical care" means 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." (5). Section 1.213-1(e)(1)(ii), Income Tax Regs., provides that amounts expended for illegal operations or treatments are not deductible and that deductions allowed under section 213 will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness. (5).
The taxpayer points to book and magazine articles about the positive health effects of sex therapy and argues that we should allow him a deduction despite the illegality of his conduct or the fact that taxpayer's doctor did not prescribe this treatment. (6).
We agree with the Commissioner that the taxpayer is not entitled to deduct the amounts at issue. Patronizing a prostitute is illegal in the State of New York. (7). The taxpayer's payments to various prostitutes were personal expenses not prescribed by a doctor and not intended to treat a medical condition. (7). [L]ikewise . . . amounts paid for books and magazines on sex therapy and pornography . . . were not for the treatment of a medical condition but were instead personal items.
I am going to leave this one alone. In all seriousness, this is a sad case for the taxpayer either way you look at it. Here is an article that appears to be the same William Halby as in this case.