Never let it be said that taxes are boring. William Halby, an attorney in New York, recently appeared before the tax court to argue that the $7,373 he spent on pornography and the $108,086 he spent on prostitutes over a two year period should be allowed as deductible medical expenses. Mr. Halby argued that these expenditures should be allowed as medical expenses due to the positive health effects of sex therapy, and presented a detailed log of “treatments” and “service providers” as support for the deductions.

Not surprisingly, Mr. Halby lost his case. Not only did the Tax Court deny all his deductions forcing him to cough up over $21,000 in tax, but because he is an attorney and should have known better, they slapped him with accuracy related penalties of over $4,000 as well.

However, in coming to the conclusion of denying the deductions, the court stated that the reasons for disallowing the expenses paid to prostitutes were because they were illegal payments, and that they were not prescribed by a doctor. This begs the question: What if they were legal payments and what if they were prescribed by a doctor? Could he then successfully deduct prostitutes and porn? The opinion is silent on this point.

Now, I DO NOT recommend that any of you try this, but consider this: Mr. Halby’s failure may not have been an excess of chutzpah (or libido), but more of a lack of proper planning. Had he secured a prescription for his “therapeutic” treatments, and had he received said treatments in a place where they are legal such as Nevada, perhaps he would have had a better case. He might even have been able to deduct his travel costs to Vegas too.

Note to Harry Reid – If this concept were buried in health care reform legislation it would have sailed through Congress in minutes.