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Tax Panel Rejects Lawyer's Bid to Deduct Spending for Sex

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Ohio

A state tax appeals board has denied a retired Brooklyn lawyer's attempts to claim hundreds of thousands of dollars he spent on prostitutes, massages, pornography and other sex-related activities as deductions for "medical expenses." Among William G. Halby's disallowed deductions were $40,588 on his 2002 return for "therapeutic sex," $70,776 for "massage therapy to relieve osteoarthritis and enhance erectile function through frequent orgasms" and $2,173 for "pornography to enhance sexual performance in lieu of taking Viagra."

"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 Halby had claimed from 2002 to 2004. State tax officials say Halby now owes $23,083 to New York state and New York City in unpaid income taxes, interest and penalties.

The ruling by tax commissioners James H. Tully Jr., Carroll R. Jenkins and Charles N. Nesbitt upheld a 2008 decision by Administrative Law Judge Andrew F. Marchese. The opinion mirrored the findings in 2009 by the U.S. Tax Court upholding the Internal Revenue Services' rejection of Halby's sex-related deductions on his 2004 and 2005 returns.

Halby, who represented himself before the tax tribunal, described himself before the panel as a 79-year-old retired lawyer who has lived alone for years. He is a University of Michigan Law School graduate who was a tax law specialist for McMillan, Constabile, Maker & Perone in Larchmont before his retirement. According to the court system's website, he still is licensed to practice law.

The appeals panel refused Halby's request that the record be sealed, saying that they had no authority to do that. It also held that other than "embarrassment, petitioner has not demonstrated good cause to grant his request to proceed anonymously." Halby did not return calls for comment.

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