“Patronizing a prostitute is illegal in New York and, thus, a taxpayer cannot claim a deduction for any illegal operation or treatment,” the panel ruled in an unsigned opinion in Matter of Halby, Nos. 821494/821810. At any rate, virtually all of the services claimed by the lawyer had not been prescribed by a doctor and “were not for the treatment of a medical condition, but rather, were instead personal items,” the panel concluded.
The three-member state Tax Appeals Tribunal, sitting in Troy, affirmed $6,308 of deductions for visits to doctors, prescription drugs and other medically justified services but rejected the remainder of the $277,961 that Mr. Halby had claimed from 2002 to 2004. State tax officials say Mr. Halby now owes $23,083 to New York state and New York City in unpaid income taxes, interest and penalties.
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