A recently publicized case allowed a taxpayer to deduct her out-of-pocket costs incurred in caring for fostered animals as a charitable contribution deduction (Van Dusen v. Commissioner, Dec. 58,642, 136 TC No. 25). The costs allowed by the court included veterinary care, pet supplies and household utilities. The court determined a portion of the claimed costs were indeed related to the taxpayer’s volunteer work with qualified section 501(c)(3) charitable organizations.
The Tax Court held that an attorney representing herself before the court could deduct a portion of her costs as unreimbursed volunteer expenses. The tax return at issue deducted $12,068 of costs, including $9,607 of veterinary bills.
The taxpayer used her residence as a foster home for about 80 undomesticated cats. By providing the foster home, she effectively donated the costs of care to a recognized Code Sec. 501(c)(3) charitable group incident to her volunteer services. The group’s mission included use of foster homes for both short and long term care. The group could initiate or request the taxpayer’s volunteer services. The group indirectly guided her work with feral cats.
The taxpayer trapped feral cats, treated them for existing health conditions, had them sterilized and vaccinated, and then returned healthier animals to the wild (which was generally an urban or suburban environment). Some of the trapped cats were so young, old, sick, injured or tame that they had to remain in foster care until they found permanent adoptive homes.
The taxpayer’s records substantially complied with the Reg. §1.170A-13(a) rules for substantiating cash donations of less than $250, even though the records showed the amounts of the expenses and to whom they were paid, rather than the name of the charitable organization and the amounts donated. The court said she used the correct rules because donations of less than $250 were categorized either as cash or as property, and unreimbursed volunteer expenses more closely resembled cash donations. The taxpayer could not deduct expenses that exceeded $250 because she had not obtained contemporaneous acknowledgment from the charity, which is required by law.
The taxpayer had 70 to 80 foster cats and seven pet cats of her own, so the court determined she could deduct 90 percent of her veterinary and pet supply expenses of less than $250. She could also deduct 50 percent of her cleaning and utility expenses of less than $250, in the absence of a more precise indication of how much of those expenses were attributable to the foster cats. However, expenses that were not directly related to the foster cats, or that the taxpayer would have incurred in any case, were not deductible in any amount. These disallowed deductions included her bar dues, unidentified hardware store purchases, expenses to repair a vacuum cleaner, and the costs of cremating one of her pet cats.
—By Jennifer M. Nelson, accountant, & Marsha L. Heinke, DVM, EA, CPA, CVPM
Marsha L. Heinke, CPA, Inc.
References: Wolters Kluwar CCH Practical Tax Bulletin 6/21/2011; United States Tax Court 136 T.C. No. 25, Docket No. 20767-08; http://www.ustaxcourt.gov/InOpHistoric/VanDusen.TC.WPD.pdf