Discussion:Taxability of "Donating" an Egg Cell (Ovum)

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Discussion Forum Index --> Advanced Tax Questions --> Taxability of "Donating" an Egg Cell (Ovum)


Discussion Forum Index --> Tax Questions --> Taxability of "Donating" an Egg Cell (Ovum)

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Sgklein (talk|edits) said:

June 2, 2008

I have a client that received a 1099-Misc with income reported in Box 7. She donated and egg cell to a donor bank while she was in college. I originally reported this as Other Income, but she subsequently received a CP2000 stating she owed SE tax on this income.

Is anyone familiar with this? I find it hard to believe that selling an egg cell one time constitutes self-employment. The IRS agent in the SE division said it was subject to SE because she was being paid for services rendered. She went, they got a viable egg cell, she was paid for the egg cell and viola! she is now in the business of selling her eggs.

I can't find any guidance on this...anyone?

Thank you, Steve

Blrgcpa (talk|edits) said:

2 June 2008
Doesn't sound right. You can't make money from donating body parts.

My hair was very long and when I decided to have it short, I donated my hair to a charity that makes wigs for sick children. It's not counted as a deductible donation.

Selling body parts is illegal.

So as you were saying...

Solomon (talk|edits) said:

2 June 2008
Batok. Note the Court relied upon the activity being regular and continuous to be considered subject to SE Tax.

Riley2 (talk|edits) said:

3 June 2008
No trade or business here since the activity is not regular, continuous, and substantial.

Marcilio (talk|edits) said:

3 June 2008
Sec. 1402 The term "net earnings from self-employment" means the gross income derived by an individual from any trade or business carried on by such individual, less the deductions allowed by this subtitle which are attributable to such trade or business.

1402(a)(3) there shall be excluded any gain or loss -- 1402(a)(3)(A) which is considered as gain or loss from the sale or exchange of a capital asset,

Publication 550Any property you own is a capital asset, except the following noncapital assets. 1. Property held mainly for sale to customers or property that will physically become a part of the merchandise that is for

  sale to customers.

2. Depreciable property used in your trade or business, even if fully depreciated. 3. Real property used in your trade or business. 4. A copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property --

  a. Created by your personal efforts,
  b. Prepared or produced for you (in the case of a letter, memorandum, or similar property), or
  c. Acquired under circumstances (for example, by gift) entitling you to the basis of the person who created the property 
     for whom it was prepared or produced. For an exception to this rule, see Capital asset treatment for self-created 
     musical works later.

5. Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale

  of property described in (1).

6. U.S. Government publications that you received from the government for free or for less than the normal sales price, or

  that you acquired under circumstances entitling you to the basis of someone who received the publications for free or for 
  less than the normal sales price.

7. Certain commodities derivative financial instruments held by commodities derivatives dealers. For more information, see

  section 1221 of the Internal Revenue Code.

8. Hedging transactions, but only if the transaction is clearly identified as a hedging transaction before the close of the

  day on which it was acquired, originated, or entered into. For more information, see the definition of hedging transaction 
  earlier, and the discussion of hedging transactions under Commodity Futures, later.

9. Supplies of a type you regularly use or consume in the ordinary course of your trade or business.

Personal use property. Property held for personal use only, rather than for investment, is a capital asset, and you must report a gain from its sale as a capital gain. However, you cannot deduct a loss from selling personal use property.

Since the ovum is not part of the 9 specifically named exceptions to capital assets, it is, by definition, a capital asset.

Sgklein (talk|edits) said:

June 3, 2008
Thank you for all the help! I'll give it a shot and see what happens. I'll let you know how it turns out.

Jdugancpa (talk|edits) said:

3 June 2008
So the sale of an ovum goes on Sch D, not on 1040 line 21? What is the holding period?

Kevinh5 (talk|edits) said:

3 June 2008
I know that we had this discussion already, oh ye faithful searchers of the yellow box.

Marcilio (talk|edits) said:

3 June 2008
Gotta try that yellow box

Marcilio (talk|edits) said:

3 June 2008
Gotta try that yellow box

Marcilio (talk|edits) said:

3 June 2008
Gotta try that yellow box

Belle (talk|edits) said:

June 3, 2008
Holding period is approximately 40-45 years....

Marcilio (talk|edits) said:

3 June 2008
Sorry about the multiple posts..computer lagged & I didn't think posts went through..lol

Joanmcq (talk|edits) said:

3 June 2008
Its not a Sch D. it is SE income per the courts.

Joanmcq (talk|edits) said:

3 June 2008
Can't remember the ruling, but we researched it here at work. It is SE. I've searched the yellow box, but can't come up with any other discussions besides this one.

Kevinh5 (talk|edits) said:

3 June 2008
Joan, I'll find it, in the meantime Discussion:Noncash Contributions - HAIR DONATION

Kevinh5 (talk|edits) said:

3 June 2008
and Discussion:Bone marrow donor

Kevinh5 (talk|edits) said:

3 June 2008
and Discussion:Tax on blood donation

Kevinh5 (talk|edits) said:

3 June 2008
and Discussion:Fertility Treatment - Donor Eggs

Kevinh5 (talk|edits) said:

3 June 2008
one of the discussions in Discussion:Far out and wacky things we hear from clients - funniest tax stories 2008

Kevinh5 (talk|edits) said:

3 June 2008
collectively, the previous 5 links give the equivalent to this current discussion.

Sales of Plasma and Blood Products

Joanmcq (talk|edits) said:

3 June 2008
However, we are not talking about the deductibility issue on the recipient end, but the income issue. If you sell eonugh plasma, you get a 1099. At work when the issue came up in a CP2000, we joked about taking depletion on the egg (you only get so many).

Kevinh5 (talk|edits) said:

3 June 2008
that is one of those 'Men are from Mars, women are from Venus' things. Men act and speak from a position of abundance. Women, from scarcity.

Kevinh5 (talk|edits) said:

3 June 2008
by the way, don't you love the google ads that pop up on top of these discussions?

Riley2 (talk|edits) said:

4 June 2008
Selling blood plasma is actually selling a service. However, a single sale of plasma does not constitute a trade or business.

Marcilio (talk|edits) said:

4 June 2008
This is an interesting topic. I've researched all over the place and I can only find a couple of references. One was a court case in which an individual unsuccessfully argued the income from sale of rare blood was not includible in gross income.

The second relates to the sale of blood by a blood bank to hospitals and commercial laboratories.

If IRS is using these cites to present a case that the activity is self-employment income, it is off base. Since there is such a sparcitiy of rulings, I think this would be a good case to ask for a PLR.

Related cases/cites: Garber 79-1 USTC 589 F2d 843, Green 74 TC 1229 (1980), Rev. Rul. 78-145 modifying Rev. Rul. 66-323, Lary 85-1 USTC 608 FSupp 258, aff'd CA-11, 86-1 USTC 787 F2d 1538, PLR 8814010.

copyrighted material from a research service has been removed for compliance with TaxAlmanac's copyright policies

Natalie (talk|edits) said:

June 5, 2008
So, how much was this woman paid for her egg? It sounds like it might be worth my time to check it out.

Fsteincpa (talk|edits) said:

5 June 2008
We used to throw eggs as kids on Halloween.

Death&Taxes (talk|edits) said:

5 June 2008
In the past the selling of blood was usually the domain of those needing another liquid to fortify themselves, which might account for the scarcity of cases.

WPCPA (talk|edits) said:

5 June 2008
This thread is getting bogged down into what came first 'the chicken or the egg'....if eggs are not produced like blood cells -then not 'regular and continuous production' a distinguishing feature - a set number at birth to each female, ergo not SE income.

More like a Cap-Gain to me - if you sold one Kidney is it SE income?

Fsteincpa (talk|edits) said:

5 June 2008
what if I donate my kidneys to tequila?

Belle (talk|edits) said:

June 5, 2008
Shouln't/wouldn't that be your liver?

Natalie (talk|edits) said:

June 5, 2008
Maybe they're looking at the entire body and figuring you can keep reproducing certain parts . . . a kidney here, hair there, throw in an egg and some plasma . . .

Belle (talk|edits) said:

June 5, 2008
Every tax season I want to clone myself....maybe there's a possibility here.

Fsteincpa (talk|edits) said:

5 June 2008
liver, kidney. all i know is I get drunk and always wind up in a bathtub filled with ice and parts are missing.

Kevinh5 (talk|edits) said:

6 June 2008
Fred, me too!!! It's the only time I can get to return phone calls - the phone is always right there when I wake up.

Fsteincpa (talk|edits) said:

6 June 2008
You too, I hate when that happens. I think it might be an accupuncturist in training cause sometimes I'll have nails and or screwdrivers stuck into my arm and leg flesh. They aren't really very good cause no matter how long I let them stay stuck in me, I don't really feel much relief.

Kevinh5 (talk|edits) said:

6 June 2008
I know what you mean. The last two or three times when I woke up there was this piece of paper - probably a note of some sort - in the melting ice with me. I never did figure out what the note said because the ink had run due to the melting ice. Why do people even use those felt tip pens anyways? Don't they know that they aren't permanent and that water destroys the writing? What if it had been an important message and not, as I assumed, just a note that I needed to pick up more ice next time I went out as the ice had all been used to fill the bathtub?

Kevinh5 (talk|edits) said:

6 June 2008
sometimes this happens when I'm staying at an out-of-town hotel, and the funny thing is, there is an ice machine on the next floor down, so why the note that we are out of ice? makes no sense to me. Or it could have been a tax-deductible receipt for the 'business meeting' from the prior evening. I don't know.

Natalie (talk|edits) said:

June 6, 2008
You guys (Fred, Kevin) are sick! Is there a doctor in the house?

Fsteincpa (talk|edits) said:

6 June 2008
and the women say I have a warped sense of reality. ROFLMAO

Pegoo (talk|edits) said:

6 June 2008
Put the egg into an I R A.

Jddanford (talk|edits) said:

6 June 2008
If you put the egg in an IRA, and then inseminate it, raise it and it starts to earn money, does that mean the person is not taxable? That would be a novel arguement. I'm not taxable because I was an IRA when I was born. Until I reach 59 1/2, or voluntarily withdraw myself from the IRA, I cannot be liable for any tax except UBI. If I withdraw myself early, how do I pay athe penalty?

Kevinh5 (talk|edits) said:

6 June 2008
you folks are just silly. This is a serious site. really.

Fsteincpa (talk|edits) said:

6 June 2008
Peak Freans are a very serious cookie. Very serious.

If you're a grown up or plan to be one, you'll know what I mean.

Joanmcq (talk|edits) said:

7 June 2008
If you withdraw early, how do you inseminate the egg?

Fsteincpa (talk|edits) said:

7 June 2008
accidents do happen eggspecially in situations such as this one.

Natalie (talk|edits) said:

June 8, 2008
Fred, you're too much!

Kevinh5 (talk|edits) said:

8 June 2008
eggactly what I would have said - no yolk!

Fsteincpa (talk|edits) said:

8 June 2008
I guess that means the yolks on me huh? that was eggstra special funny.

Hey, why did the egg cross the road?


Because the chicken was knocked up.

Har de hard boiled eggs

  • adding search term: blood donor
  • Also related: in vitro

Belle (talk|edits) said:

May 30, 2014
For Kevin...

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