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

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

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...

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.

The second relates to the sale of blood by a blood bank to hospitals and commercial laboratories. I've included that below.

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.

Gross Income: Selling Blood

Payments received for the sale of blood are included in gross income. 157 The income is not compensation for services, nor is it gain from the sale of a capital asset. It is income from the sale of property held for sale to customers in the ordinary course of business. 158

Comment Dennis E. Bires, Associate Professor of Law, University of Tulsa, College of Law, Tulsa, OK notes that: Although the courts have not directly addressed the question of the taxpayer's basis in blood, the fact that the entire receipts from the sale of blood were included in gross income indicates that the taxpayer's basis is zero. 159

157 US v D.R. Garber, CA-5, 79-1 USTC ¶9212, 589 F2d 843, aff'g an unreported District Court decision; M.C. Green v Commr, 74 TC 1229, Dec. 37,229 (1980); Rev. Rul. 78-145, 1978-1 CB 169, modifying Rev. Rul. 66-323, 1966-2 CB 216; J.H. Lary, Jr. v US, DC Ala., 85-1 USTC ¶9306, 608 FSupp 258, aff'd CA-11, 86-1 USTC ¶9376, 787 F2d 1538; IRS Letter Ruling 8814010, December 30, 1987.

158 M.C. Green v Commr, 74 TC 1229, Dec. 37,229 (1980).

159 US v D.R. Garber, CA-5, 79-1 USTC ¶9212, 589 F2d 843, aff'g an unreported District Court decision; M.C. Green v Commr, 74 TC 1229, Dec. 37,229 (1980); US v D.R. Garber, CA-5, 79-2 USTC ¶9709, 607 F2d 92.

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