Subject: So how would you advise them?Dear Mr. Kerstetter,A friend and fellow lawyer pointed this article out to me and I thought you'd find it interesting.Basically, can you be taxed on receipt of a kidney?
What I wonder is, if you and I each have a car of equal market value and we trade them, would we be taxed? Beyond the obvious bio-ethics issues, I don't see the difference.
As learned and entertaining as Professor Maule is, this is a perfect example of how ivory tower academics (and some attorneys I have known) love to let their imaginations go wild and conjure up scary tax scenarios out of what are actually innocent events.
If I were advising these people from my real world perspective on tax matters, I would have them sell their kidneys to each other for one dollar each and completely avoid the entire subjective valuation of a bartering transaction. While the black market price for kidneys may be as much as $50,000 (per a recent episode of Nip/Tuck), each person is actually entitled to establish her own price. While some cold-hearted bastards might say they should auction the kidneys to the highest bidders, basic private property rights allow us to set out own prices for things we own; so who is to say one dollar isn't appropriate?
They can each prepare a bill of sale for one dollar and report the transactions on Schedule D of their 1040s, with a cost basis of zero. The tax on one dollar of long term capital gain (acquisition date = date of their birth) will be the least of their worries.
Thanks for sharing that.