An estimated 1,600 to 2,000 people a year undergo sex-change surgery in the United States, according to the Gay and Lesbian Medical Association.
O'Donnabhain, now 63, served in the Coast Guard, got married, helped to raise three children, and worked as a supervisor at various engineering and construction jobs, including the Big Dig highway project. O'Donnabhain said she could have paid back the approximately $5,000 she received in her tax refund, but decided to challenge the IRS because she believes the ruling against her was rooted in politics and prejudice.
"This goes way beyond money," O'Donnabhain said in an interview with the Associated Press. "If I were to give the money back, it would be saying it's OK for you to do this to me. It is not OK for them to do this to me or anyone like me."
The federal Tax Court has never issued an opinion in a similar case, said Jennifer Levi, a lawyer with Gay & Lesbian Advocates & Defenders, the Boston-based legal organization representing O'Donnabhain.
But the IRS has ruled against allowing the deduction in at least one other case. In a 2005 case, the IRS ruled the costs of a woman's gender reassignment surgery and related treatments were not deductible as medical expenses. The IRS cited the section of the tax code that says cosmetic surgery or similar procedures are deductible only when they are needed to improve a congenital abnormality, an accident or trauma, or a disfiguring disease.
