Major Decision Reached: Egg Donations Considered Taxable Income


Today, 6.7 million women are facing impaired fecundity, or, the inability to get pregnant or carry a baby to term. Thankfully, science has found ways around the injustice to these mothers and families-to-be. Today, there are so many alternatives available for women and families struggling to get pregnant.


One option is egg donation. This process involves a woman donating eggs from a natural reserve in the ovaries (that normally would not be used) to another woman for the purposes of assisted reproduction. Although the process is called egg “donation,” the egg is rarely truly donated. Instead, donors are often compensated. As a result, a major question has risen: should the money received by the egg donor constitute taxable income?


Until last month, there was no definite answer to this question. Why? Establishing tax laws when dealing with the human body can be a tricky matter to tackle. Last month, everything changed when Nichelle Perez argued that her egg donation compensation should be excluded from her gross income and exempted from taxes owed.


In January, the IRS finally reached a major tax decision regarding egg donations and taxable income. The Tax Court decided Perez v. Commissioner, 144 T.C. 4, (205), concluding that the amounts represent taxable income. Why? The IRS argues that the process of donating an egg should be considered a service provided by the egg donor. Although injuries and recovery are involved, these expectations are included in the medical procedures to which the donor contractually consents.


For further information, read the full explanation of the case. What are your thoughts on the decision?


If you’re interested in pursuing assisted reproduction, please reach out to us. We can handle all legal aspects of third-party reproduction, so you can focus on what matters most…building a family.


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