Can you be taxed for selling your eggs?

By Dov Fox

Those who deal in alternative ways of making families use euphemisms that obscure the market mechanisms at work when individuals ‘‘donate’’ their eggs or sperm, couples ‘‘contribute’’ their embryos, surrogates ‘‘offer’’ their wombs, and orphans are ‘‘matched’’ to adoptive parents. Make no mistake, family formation is big business. The question of first impression before a San Diego Tax Court judge is whether that business is taxable.

Nichelle Perez, like almost 17,000 other women every year in the U.S. alone, received payment (in her case $20,000) for providing her eggs to the infertile through an invasive and risky process of ‘‘superovulation.’’ When the IRS sought to tax that payment as business earnings from self-employment, Perez objected that it ought to be exempted, lest she ‘‘be[] penalized for doing something good for another person.”

Should the sale of eggs that have grown inside a woman’s body be taxed like property that’s subject to a long-term capital gain? Or does the pain and suffering that the transaction involves make it more like a settlement from a personal-injury lawsuit? Does the answer turn on the legal (or moral) status of human eggs? Or on whether the conditions under which a woman agrees to their extraction are meaningfully ‘‘voluntary’’?

I’ve written about these and related questions in my essay on Paying for Particulars in People-to-be, as has Bridget Crawford in a thoughtful article called Our Bodies, Our (Tax) Selves. Riding on the case is not just whether $5,000 of Perez’s payment goes to her or the government. Its resolution also promises a measure of clarity for the time being for thousands of gamete vendors and providers who have until now been left only to guess.

The trial in the case was held in early January. The judge has ordered post-trial briefs from Perez and the IRS due by early March and invited interested parties to submit amicus briefs by early May, with reply briefs due at the end of that month. Business Week (today) features the first media attention to the case, Perez v. Commissioner, 009103-12. A ruling is expected before the year is out, with commentary and appeals likely to follow. Developments in the case will be available here at the U.S. Tax Court Docket Inquiry.

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About Dov Fox

Dov Fox is Professor of Law and founding Faculty Director of the Center for Health Law Policy and Bioethics at the University of San Diego School of Law. He has published dozens of articles in leading journals of law and medical ethics, most recently “Reproductive Negligence” in 117 Columbia Law Review 149 (2017). His current book project, Birth Rights and Wrongs, is under contract with Oxford University Press. His work has been featured in CNN, ABC, NPR, BBC, Reuter’s, Bloomberg, the Boston Globe, and the Washington Post. Fox is a regular columnist for The Huffington Post and contributor to the Bill of Health blog. He also serves on the advisory boards of the American Constitution Society and Appellate Defenders, the non-profit law firm that administers all appointed counsel for indigent defendants in California's Fourth Appellate District. Prior to teaching, Fox served as a law clerk to the Honorable Stephen Reinhardt of the U.S. Court of Appeals for the Ninth Circuit. He has also worked at the law firm of Wachtell, Lipton, Rosen & Katz; the consulting firm of McKinsey & Company; and the Civil Appellate Staff at the U.S. Department of Justice. Fox was awarded a Rhodes Scholarship to attend Oxford University, where he earned his DPhil and then received a Soros Fellowship for New Americans to attend Yale Law School, where he served as projects editor for the Yale Law Journal and all three years was awarded the prize for best student paper in law and the sciences.

One thought on “Can you be taxed for selling your eggs?

  1. That is an interesting read. I don’t think that she should be taxed on helping others. But, unfortunately, the laws need to be same for everyone. Would be interesting to see what is the final decision on this.

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