Delaware Law Office
of Larry D. Sullivan, Esquire

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The column to the right, is a news/editorial/comment column. It is a weblog, also know as a blog.

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Wednesday, March 29, 2006

Is the IRS going too far this year?

A major dilemma that has arisen this tax year is the bartering of body parts. There have been reports stating that two women connected through the Paired Donation Consortium, (which facilitates matching between living organ donors), are donating kidneys to the other's husband.

So what does all of this mean?

Considering the trillion dollar deficit our government has, the IRS can and might possibly force these women to pay taxes on the kidneys that helped save their husbands' lives. These women are not donating to their own husbands because of blood type mismatches. Because the women are bartering kidneys, they do in fact have gross income. These are not gifts, because each has conditioned donation on getting something in return. Each has a basis of zero in the exchanged kidney.

Surprisingly, each woman has an amount realized equal to the fair market value of a kidney. These days, a kidney can be worth as much as $10,000.00 on the black market in countries like India and China due to many indigent families who are searching for income in order to feed their families. However, the lack of cash value of the kidneys is not an obstacle to the taxation of bartered exchanges in the U.S.

IRS rulings suggest that the sale of blood and blood products would be ordinary income and perhaps personal services compensation income as ruled in the United States v. Garber, 607 F.2d 92 (5th Cir. 1979). There's no charitable contribution deduction because no charity receives the kidneys. The substance over form doctrine treats the exchange as a swap of kidneys between the two women, each then making a gift to her husband.

The only way I can imagine that someone could possibly mitigate the burden would be to list the medical expenses that were incurred during the surgery and hope that the expenses would reduce the amount owed to the IRS. However, I really doubt that the IRS will pursue the taxation considering that this was a surgery that happened once and did not lead to a consistant pattern. But I did find this story to be extremely interesting.

Posted by: Craig J. Springer

Tuesday, March 28, 2006


The phones are working again. Thank you for your patience.

Monday, March 27, 2006

No Phone Service

We are currently among the 900 Verizon customers in Newark that still do not have phone service. We apologize for the inconvenience.

The NewsJournal has a short piece on the situation here.

We are hoping that service will resume shortly.

Shipping Clerk

Small Professional Newark Office in need of organized, responsible person to learn and grow with the company. Full time, entry level position with the opportunity to demonstrate a variety of skills. Position offers significant growth potential for the right applicant. Good computer skills a must. Benefits.

Please forward resumes to or fax to 302-286-6337.

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