Glenn Cohen (Harvard Law) and Eli Adashi (Brown Medical School) have published Made-to-Order Embryos for Sale -- A Brave New World?, a short "Sounding Board" article in the New England Journal of Medicine (full cite: 368 New Eng. J. Med. 2517 (2013)). In the article, the authors look at legal and ethical issues surrounding what they call the "made-to-order" embryo business. The basic premise is that a fertility clinic takes eggs from one "donor," sperm from another, and creates several embryos at once that are then distributed for implantation among several patients. Professors Cohen and Adashi refer to this LA Times article describing this practice at one clinic.
It is worth adding to the conversation about the embryo business a discussion of taxation. Talking about tax helps bring into focus the economic aspects of transactions that in many other contexts are obscured by the language of altruism. Are there any special considerations to take into account in calculating the clinic's basis in a made-to-order embryo? How are for-profit clinics reporting their income in jurisdictions where such embryo sales are legal? My quick take is that the made-to-order embryos would be inventory in the hands of the clinic and the sales would not be eligible for capital gains treatment.
Many tax scholars eagerly await the Tax Court's decision in the Perez case (see, e.g., the Lounge's earlier mini-symposium here and here). Regardless of how that court rules, it seems to me that the intersection of taxation and the reproductive technology is going to get more -- not less -- complicated. This is an area to watch.