The Tax Court recently issued its long-awaited decision in O’Donnabhain v. Commissioner.[1] This case concerns the deductibility under section 213 of expenses that the taxpayer incurred for hormone therapy, sex reassignment surgery, and breast augmentation related to her diagnosed gender identity disorder (GID). In a reviewed decision, a sharply divided Tax Court held that the taxpayer’s expenses for hormone therapy and sex reassignment surgery were deductible as medical expenses for treatment of her GID.[2] In contrast, the court held that the taxpayer had failed to prove that her breast augmentation constituted medical care for her GID, rather than nondeductible cosmetic surgery designed merely to improve her appearance, because she already had normal breasts before her sex reassignment surgery as a result of honnone therapy.[3]

The Tax Court only rarely addresses tax issues specific to the lesbian, gay, bisexual, and transgender (LGBT) community. To date, it has been less than friendly inits dealings with openly LGBT taxpayers.[4] So it is worth taking a few moments to examine and reflect on the series of opinions in O’Donnabhain to determine whether the decision signals a salutary shift in the Tax Court’s treatment of openly LGBT taxpayers or whether O’DolUlabhain’s victory rings hollow.

Reading Judge Gale’s opinion for the majority, the words “cautious,” “clinicaV’ and “detached” immediately come to mind. Judge Gale first provides a thorough review of aU of the expert testimony in the case, a short history of the medical expense deduction, and some background regarding the enactment in 1990 of a provision disallowing deductions for specified cosmetic surgery expenses.[5] Even faced with an issue of first impression,[6] fudge Gale manages to cite copious amounts of case law and other authorities -both within and beyond tax law -in support of the majority’s decision that (1) GID is a “disease” within the meaning of section 213; and (2) the hormone therapy administered to, and sex reassignment surgery performed on, the taxpayer were “treatment” for that disease within the meaning of the statute. This firm and deliberate grounding in extant authority seems designed to lend the decision a feeling of natural development or inevitability, despite its admitted novelty.

Notwithstanding apparent sympathy for the taxpayer [7] Judge Gale’s treatment of the claimed medical expense deduction is as cold and antiseptic as the operating room where O’Donnabhain’s sex reassignment surgery took place. It seems as if Judge Gale is anticipating scrutiny either on appeal or from the public on this sensitive issue and is doing his best to cloak himself and the other judges joining the majority opinion in the mantle of the dispassionate, impartial judge. Judge Gale reinforces this impression by drawing a Solomonic distinction between the taxpayer’s deductible hormone therapy and sex reassignment surgery on one hand and her nondeductible breast augmentation on the other disallowing the latter deduction on grounds of failure of proof that it constituted treatment for her GID.[8] Judge Gale further reinforces this impression when he addresses -and refutes -the IRS’s argument that surgery aimed at improving a taxpayer’s appearance must be medically necessary in order to escape disallowance as cosmetic surgery under section 213(d)(9),[9] The statute embodies no requirement of medical necessity, and this phrase appears only in passing in a Senate committee report and not at all in the House conference report relating to the enactment of section 213(d)(9).[10] By taking on such a weak argument rather than dismissing it out of hand, Judge Gale appears to be anticipating a possible appeal.[11]

From reading Judge Gale’s majority opinion, one might infer that the Tax Court had unanimously reached its decision. There is nary a mention in the majority opinion of the disagreement of some judges with its reasoning or conclusions or an acknowledgment of arguments made in the dissenting opinions. In fact, Judge Gale’s attempt to thoroughly prepare for appellate court scrutiny seems to have taken things too far for Judge Holmes, who concurred with the majority’s decision. Judge Holmes chides the majority for taking sides in the so-called culture wars: “But I disagree with the majority’s extensive analysis concluding that sex reassignment is the proper treatment -indeed, medically necessary at least in ‘severe’ cases -for GID. It is not essential to the holding and drafts our Court into culture wars in which tax lawyers have heretofore claimed noncombatant statuS.”[12]

Even setting aside this accusation of overreaching, Judge Holmes seems altogether uncomfortable with having to decide this case. He openly laments the “crash course on transsexualism that this case has forced on us.”[l3] Curiously, this appears to be the first use of the phrase”crash course” in a U.S. Tax Court decision. Why haven’t Tax Court judges complained before about being “forced” by a taxpayer to get a crash course in the workings of a specific business or industry or of a complex business or financial transaction? Whatever happened to celebrating tax law’s close connection with the diversity of taxpayers’ life experiences?[14] Perhaps Judge Holmes needs to be reminded that he is paid to decide tax issues faced by all taxpayers and not only those with whom he feels comfortable.[15]

And if anyone were leading the Tax Court into the culture wars in this case, as Judge Holmes suggests, it would be the dissenters. Judge Halpern notes in his concurring opinion that the dissenters “raise arguments in support of respondent that he did not make,”[16] and he takes a slap at those arguments:

Clearly the issues before us are important to respondent. His opening brief is 209 pages long, and his answering brief is 72 pages long. Between them, the two briefs show a total of eight attorneys assisting the Chief Counsel, in whose name the briefs are filed. I assume that respondent made all the arguments that he thought persuasive.[17]

In meting out criticism of the dissenters, Judge Halpern reserves his harshest words for Judge Foley’s opinion, which was joinedby four otherjudges.[18] Judge Foley,who unabashedly accuses the majority of judicial activism,[19]adopts an interpretation of the definition of cosmetic surgery in section 213(d)(9) that deforms the plain language of a relatively uncomplicated statutory provision.[20] Judge Halpern accuses Judge Foley of “simply disregard[ing] the rules of grammar and logic in favor of a part of the legislative history that is silent as to the interpretative question he fashions.”[21] It seems that Judge Halpern has tarred Judge Foley with his own brush.

Nonetheless, of all of the opinions in this case, I found Judge Gustafson’s to be the most disturbing because it demonstrates how the medicalization and pathologization of gender identity can be manipulated to advance stereotypical and biased views of transgender individuals. In arguing that none of O’Donnabhain’s expenses should be allowed as a deduction under section 213, Judge Gustafson demonstrates a thinly veiled hostility toward her, arising from what appear to be his preconceived notions about transgender individuals. In his opinion, Judge Gustafson only grudgingly refers to O’Donnabhain as female: “Consistent with petitioner’s preference, I use feminine pronouns to refer to petitioner in her post-SRS state. However, this convention does not reflect a conclusion that petitioner’s sex has changed from male to female.”[22]This latter sentence is little more than an unseemly, gratuitous gibe.

As Judge Halpern points out, “Judge Gustafson cannot fathom that someone with a healthy male body who believes he is female is not sick of mind.”[23] It is worth quoting Judge Gustafson at length to get a flavor of his opinion:

The medical consensus as described in the record of this case … can be reconciled only with option 1:Petitioner’s male body was healthy, and his mind was disordered in its female self-perception. GID isin the jurisdiction of the psychiatric profession the doctors of the mind -and is listed in that profession’s definitive catalog of “Mental Disorders.”When a patient presents with a healthy male body and a professed subjective sense of being female, the medical profession does not treat his body as an anomaly, as if it were infected by the disease of an alien maleness. Rather, his male body is taken as a given, and the patient becomes a psychiatric patient because of his disordered feeling that he is female. The majority concludes that GID is a “serious mental disorder” -i.e., a disease in petitioner’s mind -and I accept that conclusion.

A procedure that changes the patient’s healthy male body (in fact, that disables his healthy male body) and leaves his mind unchanged (i.e., with the continuing misperception that he is female) has not treated his mental disease. On the contrary, that procedure has given up on the mental disease, has capitulated to the mental disease, has arguably even changed sides and joined forces with the mental disease. In any event, the procedure did not (in the words of Havey v. Commissioner, 12 T.e. at 412) “bear directly on the *** condition in question,” did not “deal with” the disease (per Webster’s), did not “treat” the mental disease that the therapist diagnosed. Rather, the procedure changed only petitioner’s healthy body and undertook to “mitigat[el" the effects of the mental disease.[24]

In this passage, Judge Gustafson seems to be displacing O’Donnabhain’s own sense of self -not to mention the judgment of her doctors -and substituting for it his own preconceived notions about her condition. Because there was nothing “objectively” wrong with O’Donnabhain’s male body, Judge Gustafson believes that she must have merely been suffering from a delusion, as he suggests in an earlier footnote.[25] Thus, instead of being permitted to undergo surgery that would allow O’Donnabhain to become “content with [her] delusion,”[26] she presumably should have been forced to undergo therapy designed to make her content with the male body that Judge Gustafson deems to have been more than satisfactory. His disdainful opinion stands in stark contrast to Judge Gale’s cautious opinion and remarkable efforts to appear detached and impartial in this case.

In the end, O’Donnabhain walked out of the Tax Court with a qualified win, having obtained a decision allowing a deduction for at least a portion of her expenses under section 213. However, with a majority that treaded ever so cautiously out of an apparent fear of being accused of judicial activism, and dissenters who shamelessly attempted to foist activist readings of the statute onto the court, it will be difficult for LGBT taxpayers to walk away from reading these opinions harboring any hope that they will get a hearing in the Tax Court that is unaffected by their sexual orientation or gender identity.

[1]134 I.e. No.4 (Feb. 2,2010), Doc 201 ()-2490, 2010 TNT 22-8.

[2]Id. at 67-69.

[3]Id. at 60-63.

[4]See Anthony e. Infanti, “Tax Protest, ‘A Homosexual,’ and Frivolitv: A Deconstructionist Meditation,” 24 St. Louis U. Pub. ‘.1. Re<l.'21, 33-40 (2005); see also Merrill tCommissioller, I.e.Memo. 2009-116, Doc 2009-15879,2009 TNT 132-5.

[5]0'Donllabhain, 134 I.e. No, 4, at 14-30.

[6]1d. at 32.

[7]Id. at 68. ("Respondent's contention that petitioner undertook the surgery and hormone treatments to improve appearance is at best a superficial characterization of the circumstances that is thoroughly rebutted by the medical evidence.")

[8]Id. at 60-63.

[9]Id. at 64-67.

[10]Id. at 64 n.54, 65.

[11]Id. at 81 (Halpern, J., concurring). ("Without deciding whether section 213(d)(9) requires a showing of medical necessity, the majority nonetheless finds that petitioner's sex reassignment surgery was medically necessary. Apparently, the majority is preparing for a perhaps different view of the statute by the Court of Appeals." (Citation omitted.ª

[12]Id. at 82 (Holmes, J., concurring). Judge Holmes seems to be unaware of the significant critical tax literature that does touch on issues related to the culture wars. See Critical Tax Theory: An Introduction (Infanti and Crawford eds., Cambridge University Press, 2009).

[13]Id. at 82 (Holmes, J., concurring).

[14]See Welch v. Helvering, 290 U.s. Ill, 115 (1933). ("The standard set up by the statute is not a rule of law; it is rather a way of life. Life in all its fullness must supply the answer to the riddle.") Indeed, I have always found that one of the most attractive and interesting features of the tax law is that it exposes me to a variety of business, financial, and personal settings.

[15]Judge Holmes should heed the spirit of the advice that he gives the IRS in this case: "It is not effective advocacy to denigrate the people whose government one is representing." O'Donnabhain, 134 'I.e. No.4, at 90 n.3 (Holmes, J., concurring). Similarly, it is not good judging to denigrate the taxpayers who come before, and fund the operations of, the Tax Court.

[16]Id. at 71 (Halpern, J., concurring).

[17]Id. at 71 n.1.

[18]Judge Foley concurred with the majority's disallowance of a deduction for the expenses related to the taxpayer's breast augmentation, but disagreed with the reasoning supporting thatin part). He presumably dissented from the remainder of the ma~ority opinion.

[19]Id. at 111. ("In allowing deductions relating to petitioner's expenses, the majority has performed, on congressional intent, interpretive surgery even more extensive than the surgical procedures at issue -and respondent has dutifully assisted. This judicial transformation of section 213(d)(9) is more than cosmetic.")

[20]Compare, e.g., section 213(d)(9)(B) (defining cosmetic surgery), with section 304 (governing the tax treatment of redemptions through affiliated corporations).

[21]0'Donnabhain, 134 T.e. No.4, at 79 (Halpern, J., concurrinß).

[22]Id. at 119 n.2 (Gustafson, J., concurring in part and dissenting in part).

[23]Id. at 71 (Halpern, J., concurring).

[24]Id. at 137-138 (Gustafson, J., concurring in part and dissenting in part) (citation omitted).

[25]Id. at 132 n.9.

[26]Id.

Previously published by the University of Pittsburgh School of Law, March 2010