Tax Lawyer Fights Rulings Barring Deduction For Prostitutes.
A 78-year-old retired Brooklyn, N.Y. tax lawyer said Thursday he will continue to challenge state and federal rulings disallowing medical expense tax deductions he claimed for his spending on prostitutes and pornography.
"It's a holistic approach to medicine," William G. Halby told Forbes. He said he spent the money--more than $300,000 over five years--to fight depression: "I live alone. I have no regular sexual partner." A father of three adult children, Halby said he has been separated for eight years but hasn't filed for divorce because it would affect medical insurance for his spouse.
This week, the U.S. Tax Court disallowed Halby's federal-tax-return deductions for 2004 and 2005. Last year, the New York State Division of Tax Appeals ruled the same way for his state tax returns from 2001 to 2005.
Besides noting that Halby's course of treatment did not have a doctor's blessing, both tribunals said prostitution is illegal in New York State and thus as a matter of public policy couldn't be the basis for a deduction.
Halby, who represents himself, said his appeals are focusing on what he said was an argument he made in legal briefs but which the judges didn't discuss: The U.S. Constitution contains a right of privacy that protects consensual sex whether paid or not. "I was very disappointed the judges didn't deal fully with my constitutional claims," he said. "If they are citing the illegality of prostitution in ruling against me, they have to rule on my position."
His appeal of the New York state decision--it found he owes tax of $18,000 plus interest--is pending before the State Tax Appeals Tribunal in Albany, an employee for that agency confirmed Thursday. Halby said he expected a hearing to be held early next year.
William P. Barrett, 09.17.09, 07:00 PM EDT
http://www.forbes.com/2009/09/17/prostitution-taxes-deductions-personal-finance-lawyer.html

