Thanks to Paul Caron, I came across Perez v. Commissioner, No. 9103-12 (Feb. 14, 2014) (Holmes, J.) the first case addressing the inclusion in taxable income (and perhaps the proper characterization) of compensation received for the sale or donation of human eggs and related services. The court has ordered that amicus briefs be filed by May 9, 2014, and some law profs will be submitting briefs in the case.
Perez is now the second big case pending in the courts that will test the limits of “donor-speak” in the multi-million dollar commercial egg business, by which I mean how we reconcile an insistence that oocytes used in third-party reproductive technologies are “donated,” despite the payments of fairly large sums as compensation. I’ve blogged on several occasions about the other case, Kamakahi v. American Society For Reproductive Medicine, a federal antitrust class action challenging the ethical rules on compensation to egg donors as an illegal price fixing agreement. See, for example, here, here, and here.
From a recent Bloomberg article on Perez:
The California woman and the government are arguing over whether egg donation is an act of commerce that should be taxed. A U.S. Tax Court judge will determine the outcome in what is seen as a precedent-setting case that could provide certainty for people who donate eggs, sperm and blood plasma. . . .
In 2009, Perez twice donated eggs through the Donor Source International LLC, each time receiving $10,000 after a months-long process that included injections and medical exams.
She didn’t report the income on her tax return and received a notice from the IRS. The tax agency acted after receiving an informational return from The Donor Source saying that Perez had been paid.
Despite my interest in the egg trade, my tax knowledge can pretty much be summed up through this simple formula: for every $995 of accounting fees I pay, I save $1000 in tax payments. Needless to say, I needed to call on some professional help for this one. So I’ve recruited two scholars who have written on taxation and the human body for assistance.
This week, perma-Lounger Bridget Crawford (Pace) and special guest blogger Lisa Milot (Georgia) will join us in the Lounge for a mini-symposium on Perez v. Commissioner. Bridget teaches Federal Income Taxation; Estate and Gift Taxation; and Wills, Trusts and Estates. She joined the Pace faculty in 2003, after more than six years of law practice at Milbank Tweed Hadley & McCloy LLP in New York. She is the author of Our Bodies, Our (Tax) Selves," 31 Virginia Tax Review 695 (2012), and Taxing Surrogacy," Challenging Gender Inequality in Fiscal Policy Making: Comparative Research on Taxation 95-108 (2011) (Asa Gunnarsonn et al., eds.)
Lisa specializes in federal transfer taxation, estate planning, and property law. Prior to joining the Georgia Law faculty in 2007, she practiced for five years with the tax law firm Ivins, Phillips & Barker in Washington, D.C., where she was a special partner in the tax and estate planning group. Prior to that, she was an associate in the business group at the firm Cooley LLP in Reston, Va. She is the author of "What Are We - Laborers, Factories, or Spare Parts? The Tax Treatment of Transfers of Human Body Materials" in the Washington and Lee Law Review; "Accounting for Time: A Relative-Interest Approach to the Division of Equity in Hybrid-Property Homes Upon Divorce" in the Kentucky Law Journal and "Illuminating Innumeracy" in the Case Western Reserve Law Review.
Check back in on Wednesday as Bridget, Lisa, and I (but mostly Bridget and Lisa) discuss taxing eggs!
Other Taxing Eggs Mini-Symposium Posts: