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You finished IVF. Can you donate embryos and get a tax deduction?

by SuperiorInvest

The Alabama Supreme Court's in vitro fertilization ruling this year, which held that frozen embryos should be considered children, raised a long list of questions for people concerned about their future fertility treatments. My colleague Tara Siegel Bernard and I tried to answer many of them in February.

But some unusual ones still remain for people around the world who want to explore all the options. What does the law say about what you can and cannot do with your embryos? Can you sell them? And if you donate them (for example, to a university for research purposes), can you get a tax deduction?

It's hard to find direct answers to questions about sales and donations.

It's unclear how many human embryos are stored across the United States, but many people who deposit them there fear losing control over them. Court cases like the one in Alabama, which all but temporarily halted IVF treatments there, will do that to a person. So will growing restrictions on abortion in many states and concurrent discussions about when life begins.

It may make sense to act preventatively, if possible. But to do what?

Selling embryos seems crazy, although it may not violate federal law. The National Organ Transplant Act of 1984 prohibits the sale of items found inside or outside the human body, such as kidneys, livers, bones and skin, but does not mention embryos.

All legal considerations aside, there may not be a huge market for anyone looking to sell embryos. Additionally, many potential sellers will probably give a lot of thought to the feelings of any potential child and the questions that child might have years later.

“The unheard voice is the voice of children,” said Dr. Sigal Klipstein, a physician and chair of the ethics committee of the American Society for Reproductive Medicine. “They may be the biggest stakeholders.”

Then there is the question of a possible tax deduction for donating embryos to a university for scientific research. The Internal Revenue Service declined to comment on the matter and does not appear to have issued any guidance directly on the matter.

Anyone looking to take a deduction anyway and potentially fight the IRS should consider at least three questions, said Tessa R. Davis, a professor at the University of South Carolina Joseph F. Rice School of Law.

First, are embryos property and not the product of a service offering? Second, if they are property, how is the asset classified given the different tax treatments for different types of assets? The classification alone can determine the size of the deduction.

Finally, a particularly thorny question arises: What is the fair market value of an embryo?

This leads to other questions: How could the value depend on what it cost to create the embryos? What about the cost of maintaining them? Do you subtract a proportional amount for the embryos you have implanted, or do you only do so if the implantation resulted in a live birth? One of the many reasons colleges might not send a standard charitable confirmation letter to people donating embryos is that those notes typically detail the value of the donation.

Professor Davis has devoted her scholarship to questions in this general area, but has few answers to them. “The short answer is that there is very limited and unclear guidance from the IRS that is not always internally consistent,” she said. “The very short answer is: 'Who knows?'”

Another question legal experts ask about the deductibility of frozen embryo donations is this: Who would want to be involved in an argument over this deduction in federal court?

The answer may surprise you. “If you assume that embryos are property and have value, then you're in the middle of a race and someone tries to step in and say, 'IRS, stop it! These embryos are not property, they are human beings in cryogenic nurseries,'” said Susan L. Crockin, a lawyer in Washington and adjunct professor at Georgetown University Law Center, where she teaches assisted reproductive technology law.

In other words, you may not have a chance to win your argument about deductions. Third parties could successfully claim standing to intervene in the case. Once they do, they could try to persuade a federal judge to close the case by declaring that the embryos are people and not property.

For now, donating embryos to science is something you can do. But for someone who believes embryos are actually people, a federal court case over whether such donations are deductible is an opportunity to advance the cause of fetal personhood.

However, someone who wants to preserve abortion rights may not want to be in the middle of that.

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