IVF and surrogacy costs are deductible only when the care is performed on the taxpayers themselves

Plain-English summary

A married couple asked whether they could deduct the costs of having a child through in vitro fertilization (IVF) and a gestational surrogate. One spouse has a medical condition requiring medication that is dangerous in pregnancy, so the couple planned to use the husband's sperm, a donated egg, and a surrogate to carry the pregnancy. Under Section 213, medical expenses are deductible only when the care is for the taxpayer, the taxpayer's spouse, or a dependent. The IRS drew a line based on whose body the care treats. Costs for procedures performed on third parties (the egg donor and the surrogate), such as egg donation and retrieval, IVF embryo creation and storage, the surrogate's childbirth and insurance, and the legal and agency fees for the surrogacy, are not deductible, because they do not treat the taxpayers' own bodies. But costs for care performed directly on the taxpayers, such as the husband's sperm donation, are deductible, subject to the usual limits (only the portion of total medical expenses above 7.5 percent of adjusted gross income, and not reimbursed by insurance). This continues the IRS position, backed by cases like Morrissey and Magdalin, that most surrogacy-related expenses fall outside Section 213.

Ruling snapshot

• Question: Can a couple deduct IVF, egg-donor, and surrogacy costs under Section 213 when the procedures are performed on third parties?
• Outcome: mixed (costs for care on the surrogate/egg donor are not deductible; care performed directly on the taxpayers, such as sperm donation, is deductible within Section 213 limits)
• Key authorities: IRC §§ 213(a), 213(d), 152; Morrissey v. United States, 871 F.3d 1260 (11th Cir. 2017); Magdalin v. Commissioner, T.C. Memo. 2008-293

Full text (IRS public release)

 Internal Revenue Service                                  Department of the Treasury
                                                           Washington, DC 22204
 Number: 202505002
                                                           Person to Contact:
 Release Date: 1/31/2025
                                                           --------------
 Index Number: 213.00-00                                   Employee Identification Number:
                                                           -----------------
 ------------------------------------                      Telephone Number:
 -------------------------------                           --------------------
 --------------------------                                Refer Reply To:
                                                           CC:ITA:B2
 In re: ------------------------------------               PLR-107243-24
 -------------------------------------                     Date:
 -------------------------------------                     October 11, 2024




                                                   LEGEND

Taxpayers                  =       ------------------------------------
Taxpayer A                 =       ---------------------------------------------
Taxpayer B                 =       --------------------------------------------
1                          =       -----------------------------------
2                          =       -------------------------------------------------
3                          =       ---------------------------------
4                          =       --------------------------------
State                      =       ------------
Date                       =       --------------------
Year 1                     =       -------



Dear ----------------------------:

This letter ruling responds to a private letter ruling submission dated April 1, 2024,
requesting a ruling on the deductibility of medical and related costs and fees arising
from in vitro fertilization (IVF) procedures, gestational surrogacy, and related items.

                                                    FACTS

Taxpayers are a heterosexual married couple legally married in State. Taxpayer A was
diagnosed with 1 in Year 1 and has additional related diagnoses of 2, 3, and 4. 1
requires Taxpayer A to take medication that is contraindicated in pregnancy and has a
documented history of being detrimental to pregnancy. As such, Taxpayers will use a
pregnancy surrogate and in vitro fertilization (“IVF”) with Taxpayer B’s sperm and a
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donated egg from a third party. As stated in the ruling request, Taxpayers seek a ruling
under § 213 of the Internal Revenue Code (Code) that would authorize deductions for
costs and fees related to the following:

· Medical expenses directly attributed to both spouses;

· Egg donor related costs;

· Medical expenses of sperm donation;

· Sperm freezing;

· IVF medical costs (expenses of embryo creation and storage)

· Childbirth expenses related for the surrogate;

· Surrogate medical insurance related to the pregnancy;

· Legal and agency fees for the surrogacy; and

· Any other medical expenses arising from the surrogacy.

We held the conference of right on Date and considered additional information provided
by Taxpayers after the conference in this ruling letter.

                                  LAW AND ANALYSIS

Section 213(a) allows a taxpayer to deduct expenses paid for medical care of the
taxpayer, spouse, or dependent (defined in § 152, determined without regard to
subsections (b)(1), (b)(2), and (d)(1)(B)), to the extent the expenses exceed 7.5 percent
of the taxpayer’s adjusted gross income and were not compensated for by insurance or
otherwise. Section 152(a) defines a dependent as a qualifying child, including a child of
the taxpayer. Section 152(c)(2)(A).

Section 213(d)(1)(A) provides that medical care includes amounts paid for the
diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of
affecting any structure or function of the body. Medical care also includes amounts paid
for insurance covering medical care. Sections 213(d)(1)(B) and (D).

Several courts have rejected the deduction of expenses for reproductive technologies,
like IVF and surrogacy procedures, as medical care under § 213 when the taxpayer,
spouse, or dependent, did not personally use the technologies and/or have an
underlying disease necessitating the use of the technologies. See, e.g., Morrissey v.
United States, 871 F.3d 1260, 1271 (11th Cir. 2017); Longino v. Commissioner, T.C.
Memo. 2013-80, aff’d, 593 Fed. Appx. 965 (11th Cir. 2014); Magdalin v. Commissioner,
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T.C. Memo. 2008–293, aff'd without published opinion, 2009 WL 5557509 (1st Cir.
2009). The United States Court of Appeals for the First Circuit, in affirming the Tax
Court in Magdalin, explained that in vitro fertilization and placement of the resulting
embryos in unrelated gestational carriers “affected the bodies of the gestational carriers
who … were not the taxpayer’s dependents.” Magdalin, 2009 WL at 5557509. See also
Morrissey v. United States, 226 F. Supp. 3d 1338, 1341-42 (M.D. Fla. 2016) (observing
that § 213 is limited to medical care of taxpayer, taxpayer’s spouse, or a dependent,
and “expenses paid for medical procedures performed on … third-party egg donors and
surrogates cannot be deducted”).

Here, Taxpayer A has been diagnosed with 1, 2, 3, and 4, and must therefore take
medication that is contraindicated in pregnancy and has a documented history of being
detrimental to pregnancy. The use of assisted reproductive technologies will not directly
and literally affect the structure or function of Taxpayer A’s own body but will instead
affect the structure or function of a third-party, the pregnancy surrogate. Most expenses
paid to effectuate a surrogate pregnancy through assisted reproductive technologies are
not expenses paid for the medical care of the taxpayer, the taxpayer’s spouse, or
dependent and are not deductible as medical expenses because they do not meet this
basic requirement of § 213(a)(1).

As such, payments related to the following products and services involving assisted
reproductive technologies not being performed on taxpayers are not deductible under
§ 213: egg donor costs, egg retrieval, sperm freezing, IVF medical costs, legal and
agency fees for the surrogacy, childbirth expenses related to the surrogate pregnancy,
surrogate medical insurance related to the pregnancy, and other medical costs and fees
effectuating and arising from the surrogate pregnancy.

Subject to the gross income limitation, however, the costs or fees paid for medical care,
including involving assisted reproductive technologies directly attributable to taxpayers,
such as sperm donation from Taxpayer B, are deductible medical expenses under §
213.

                                     CONCLUSION

Based on the facts and representations submitted, the Service concludes that the costs
and fees related to assisted reproductive technology, such as childbirth expenses for
the surrogate pregnancy, medical insurance related to the surrogate pregnancy, egg
donation, and other procedures effectuating surrogacy, not being performed directly on
the Taxpayers or that are directly related to the surrogate pregnancy do not qualify as
deductible medical expenses under § 213. Medical costs and fees of assisted
reproductive technologies and other medical care directly attributable to Taxpayers are
deductible within the limitations of § 213, including for sperm donation.

The ruling contained in this letter is based on information and representations submitted
by Taxpayers and accompanied by a penalty of perjury statement executed by an
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appropriate party. While this office has not verified any of the material submitted in
support of the request for rulings, it is subject to verification on examination.

This ruling is directed only to the taxpayers requesting it. Section 6110(k)(3) provides
that it may not be used or cited as precedent.

We are sending a copy of this letter to the appropriate operating division director.


                                                        Sincerely,

                                                        /s/ Robert A. Martin

                                                        Robert A. Martin
                                                        Branch Chief, Branch 2
                                                        Office of Associate Chief Counsel
                                                        Income Tax & Accounting



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