Egg donors have to go through a barrage of tests and hormone therapies and as such are compensated rather well. The payout for enduring the process generally runs around $50,000 for those who make it through. In Perez v. Commissioner the tax court finally made a definitive ruling that this money is taxable. Perez tried to argue that the payment was for pain and suffering and thus excludable under Internal Revenue Code Section 104 as a payment for physical injury.
For all you tax buffs it is important to note what the case was not about. It was not a case to determine the tax treatment of selling her eggs. Perez was compensated for her time and would have been paid regardless of whether there was a successful donation. Though income from donating other items such as plasma is taxable.
If you need help with your taxes, contact us at 816-524-4949 or visit our website at www.Hoorfarlaw.com.