We wrote about an interesting tax case earlier this week which may see an egg donor having to pay tax on her donor compensation.
Nichelle Perez maintains that the $20,000 she received (in 2009) through donating eggs was exempt from tax and payment for pain and suffering. However, the IRS considers it to be income.
At the crux of the case, which will have far reaching consequences, is whether the act of donating eggs constitutes an act of commerce. There is it seems, a lot uncertainty as to how it should be regarded.
Ms Perez didn’t record the income on her tax return, however the IRS received information from the donor source which indicted that Ms Perez had been paid.
Legal academics have suggested that it is unlikely that Ms Perez’s argument that the income was akin to damages for a personal injury will find favor with the court given that she consented to the medical procedures.
If however the court were to rule that the donation was tantamount to sale of property Ms Perez wouldn’t be liable for self-employment tax at 15.3%
A ruling is expected after May 2014. The consequences of this ruling will be significant and not limited just to egg donor compensation, but sperm donation as well.