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Prostitution Is Not Deductible as a Medical Expense

A taxpayer was denied a medical expense deduction for $105,000 paid to prostitutes and $25,000 for medical books and pornographic materials. [Halby v. Commissioner; TC Memo. 2009-204]

Citing several books and magazine articles, the taxpayer argued of the positive health effects or sex therapy. Treasury Regulation 1-213-1(h) specifically provides that a taxpayer is not entitled to a medical expense deduction for any illegal operation or treatment. Since his doctor did not prescribe a treatment for any medical condition, the taxpayer’s payments were nondeductible personal expenses. 

Since the taxpayer was an attorney for 40 years, he had no reasonable basis to claim the deduction and was liable for a 20% accuracy-related penalty for substantial understatement of tax.

Tax Tip: Items that may improve your health (such as healthy food) are considered personal in nature and are not deductible as medical expenses.

Richard Pon CPA, CFP