'Cat lady' denied deductions by court

It seems as if every neighborhood has a "cat lady." And now the Tax Court has Jan Van Dusen.

Van Dusen is an attorney who cares for cats in her private residence. She volunteers for a qualified charitable organization called Fix Our Ferals.

Van Dusen traps feral cats, has them neutered, obtains vaccinations and necessary medical treatments, houses them while they recuperate and releases them back into the wild. She also provides long-term foster care to cats in her home. She attempts to place long-term foster cats in no-kill shelters or find them adoptive homes. Some foster cats stay with her indefinitely.

Van Dusen has between 70 and 80 cats. Most cats roam freely around Van Dusen's home. Less domesticated cats stay in a separate room called the "feral room."

Van Dusen devotes essentially her entire life outside of work to caring for the cats. Each day she feeds, cleans and looks after the cats. She launders the cats' bedding and sanitizes the floors, household surfaces and cages. Her house is so extensively used for cat care that she never has guests over for dinner.

Van Dusen purchased large quantities of pet supplies and cleaning supplies. She renewed her Costco membership so she could buy cat food and cleaning supplies at lower prices. She repaired her wet/dry vacuum so she could easily clean the floors. Van Dusen incurred higher electricity and gas bills because she laundered many loads of cat bedding and ran a special ventilation system to ensure fresh air. The frequent laundering also increased her water bills. Her garbage bills increased because of the high volume of cat-related waste.

On her tax return, Van Dusen deducted $12,000 as an itemized deduction for noncash charitable contributions attributable to a "cat rescue operation." The IRS denied the deduction.

The Tax Court determined that Van Dusen's records substantially complied with the 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. These were the correct rules to use because donations of less than $250 are categorized as either cash or property, and unreimbursed volunteer expenses more closely resemble cash donations.

However, the court denied her deduction for expenses that exceeded $250 because Van Dusen had not obtained contemporaneous acknowledgment from the charity.

The result of this case (Jan E. Van Dusen v. Commissioner, 136 T.C. No. 25, June 2, 2011) demonstrates that, to sustain a tax deduction, it is imperative to obtain receipts from charities for contributions of $250 or more, even if they are reimbursements of expenses. These contributions must be evidenced by a comtemporaneous written acknowledgment from the charity and must indicate:

  • The amount contributed
  • A description of any property contributed
  • A description and an estimate of the value of any goods or services received by the donor in exchange for the contribution
  • Whether the donee provided any intangible religious benefits
 
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