NY Tax Lawyer’s $100K in Deductions for Prostitutes Disallowed

A New York tax lawyer has lost a bid to deduct more than $100,000 in payments for prostitutes and pornography.

The federal Tax Court denied the deductions, claimed by lawyer William Halby as medical expenses for sex therapy. TaxProf Blog reported on yesterday's ruling, first noted by Tax Update Blog.

The U.S. Tax Court opinion (PDF) involved more than $100,000 in deductions for 2004 and 2005. Halby noted his visits to prostitutes in a tax journal, but they were not part of a physician-ordered therapy and they are illegal in New York, the Tax Court said.

Halby lost a similar bid before the New York Division of Tax Appeals last year, the New York Post reported at the time. The New York ruling involved more than $300,000 in deductions for 2002, 2003 and 2004.

“This was not the ‘happy ending’ William Halby was looking for,” the Post wrote. Its article was headlined “Kinky Bid to Be Tax XXX-Empt.”

Halby, who was 77 when the Post wrote its story, told the newspaper he was divorced, depressed and living alone. He is a former counsel for the Equitable Life Insurance Society of the United States and was working as of counsel with McMillan, Constabile, Maker & Perone at the time of the story.