136 T.C. 515
T.C.2011Background
- Van Dusen cared for foster cats at her residence in 2004 as a Fix Our Ferals volunteer, incurring unreimbursed expenses (veterinary, pet and cleaning supplies, utilities, Costco renewal, vacuum repair).
- Fix Our Ferals is a 501(c)(3) organization; its mission includes trap-neuter-return and foster care for cats.
- IRS denied a $12,068 charitable-contribution deduction; the dispute centers on whether expenses were incurred incident to services rendered to a deductible organization.
- Court adopts stipulations and finds Van Dusen’s foster-cat care was a service to a section 170(c) organization, with some expenses disallowed for lack of attribution or substantiation.
- For expenses under $250, recordkeeping under sec. 1.170A-13(a) applies and is met; for $250 or more, contemporaneous written acknowledgments were not obtained, disallowing those portions; a $100 donation to Island Cat Resources and Adoption is deductible.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether foster-cat care constitutes services to a charitable organization | Van Dusen performed services for Fix Our Ferals | IRS contends services were not tied to the organization | Yes; foster-cat care was services to Fix Our Ferals |
| Whether foster-cat expenses are deductible as unreimbursed expenses incident to services | Expenses were directly connected to and solely attributable to foster-cat care | Many expenses were personal or not solely for foster care | Partially deductible; 90% of vet expenses and pet supplies, 50% of cleaning supplies and utilities, with some items entirely disallowed |
| Whether expenses under $250 are substantiated under sec. 1.170A-13(a) | Records meet substantial compliance; substitutes for canceled checks | Records must name donee and amounts per reg.; stricter scrutiny | Van Dusen substantiated under the substantial-compliance approach for under-$250 expenses |
| Whether expenses of $250 or more are substantiated by contemporaneous written acknowledgment | Attempted to obtain acknowledgment; trial evidence insufficient | No contemporaneous acknowledgment by due date (Apr 15, 2005) | Not deductible; no proper contemporaneous acknowledgment for $250+ expenses |
| Whether section 280A affects deductibility for home utilities | Deduction allowed independent of dwelling-use limitations | Section 280A bars deduction if tied to dwelling use | Section 280A does not affect deduction; utilities deductible as part of charitable service under exception |
Key Cases Cited
- Davis v. United States, 495 U.S. 472 (U.S. 1990) (unreimbursed volunteer expenses may be contributions to a charity)
- Smith v. Commissioner, 60 T.C. 988 (Tax Ct. 1973) (supervisory control not required for service-related deductions)
- Saltzman v. Commissioner, 54 T.C. 722 (Tax Ct. 1970) (organization-directed activities affect deductibility)
- Bond v. Commissioner, 100 T.C. 32 (Tax Ct. 1993) (substantial compliance applies to recordkeeping for deductions)
- Davis v. United States, 495 U.S. 472 (U.S. 1990) (see above)
- Orr v. United States, 343 F.2d 553 (5th Cir. 1965) (expense deductions must be solely for charitable use)
- Smith v. Commissioner, 60 T.C. 988 (Tax Ct. 1973) (context for service-related deductions)
- King v. Commissioner, 676 F.2d 35 (2d Cir. 1982) (commentary on charitable contributions jurisprudence)