In re Rhiannon O'Donnabhain
http://www.glad.org/work/cases/in-re-rhiannon-odonnabhain/Victory! On February 2, 2010, the U.S. Tax Court issued an important decision in O'Donnabhain v. Commissioner of Internal Revenue, ruling for the first time that treatment for gender identity disorder qualifies as medical care under the Internal Revenue Code, and is therefore deductible.
Read the Tax Court's Decision
Ms. O'Donnabhain deducted costs related to her sex reassignment when submitting her federal tax forms in April 2002. She received her tax refund in June 2002, but six months later she was audited.