As you probably know, the relevant law says this:
"In pertinent part, I.R.C. § 213(a) states as follows: “There shall be allowed as a deduction the expenses paid during the taxable year, not compensated by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent?” Particularly important to this appeal is Section 213(d)'s definition of the term “medical care” as it is used in Section 213(a)—as relevant here, “[t]he term ‘medical care’ means amounts paid ? for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.” I.R.C § 213(d)."
In 2015 the Court of Appeals affirmed the IRS denial of a tax deduction for IVF and surrogacy expenses for a gay male couple, on the grounds that the surrogacy expenses were not for the cure of a disease of the taxpayer, or to affect the body of the taxpayer (the gay man who claimed the deduction). MORRISSEY v. UNITED STATES
However, I am having a hard time finding similar case law for lesbians (maybe I just don't know the right places to search). Anything that is done to affect your body (assuming you are going to be biological parent -- egg donor and gestational parent) would seem to be covered by the statute. You don't meet the "diagnosis, cure, mitigation, treatment, or prevention of disease" clause, but it does seem to meet the "for the purpose of affecting any structure or function of the body" clause.
(Of course, if IVF treatments are deductible for lesbian couples because the treatment affects the taxpayer's body, in a way that IVF and surrogacy don't affect the taxpayer for gay men, this could be argued by some to create an unequal treatment issue. I don't think the courts have addressed this, and of course the best way to get childbearing expenses for gay couples deductible would be to actually change the law at Congress.)
The most restrictive argument would be that nothing is deductible because you aren't sick. Or, that fertility prescriptions would be deductible if the taxpayer had an underlying fertility problem that had to be treated at the same time as the IUI procedure.
The most generous argument would be that anything that affects the function of the taxpayer's body is deductible, and that would include the drugs as well as the IUI procedure. (The cost of the sperm I would consider the most dodgy.)
So I agree it is tough to find information that is specific to lesbians and IUI. Maybe someone else will have more thoughts.
