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Feline Friend 1, IRS 0

Some say the world is divided between dog lovers and cat lovers. Jan is the latter. She has seven cats of her own that live with her in her modest California home. But Jan also puts her modest financial means where her mouth is. As a volunteer for a local IRS approved charity, she has taken care of some 70 stray cats at her home while adoptive homes were being found for them. The charity's mission is to trap stray cats, neuter them, and then place them in homes temporarily until they can be adopted or released.

Jan's unreimbursed expenses for so many cats had a way of adding up fast. In a recent tax year, she claimed a deduction on her income tax return for that year's expenses of more than $12,000, for everything from food and vet bills to kitty litter. The IRS took a dim view of the deduction, contending that the expenses were all personal nondeductible expenses and disallowing the deduction.

Representing herself because she could not afford to hire a lawyer, Jan handled her case all the way to the U.S. Tax Court, which sets precedents sometimes having broad application nationally. In that venue, she won on the most important issues, thereby improving the financial prospects for volunteers nationwide, especially those who incur unreimbursed expenses that can be shown to further the missions of groups like Jan's. There are more than 1.5 million IRS recognized charities in the United States.

The Tax Court judge agreed with most of Jan's contentions. He permitted her to deduct most of her bills for feral cats, since such bills had been incurred to help a charitable group fulfill its mission. A couple of items were disallowed, such as the cost of cremating a cat and of repairing Jan's wet/dry vacuum. The deductible expenses included 90% of Jan's vet bills and 50% of her cleaning supplies and utility bills.

The total deduction was reduced somewhat for a reason that should be noted by others who might follow Jan's example-she didn't have a valid letter from the charity acknowledging her volunteer work for expenses of $250 or more. In addition to getting such a letter, the taxpayer needs to keep good records of the pertinent expenses.

In Jan's case, the court ruled that the regulatory requirements for money contributions governed her expenses of less than $250. Her records for such expenses were acceptable substitutes for canceled checks, under the "substantial compliance" doctrine.

This website is not intended to constitute legal advice or the provision of legal services. By posting and/or maintaining the website and its contents, Lucas Law does not intend to solicit business from clients located in states or jurisdictions outside of Illinois wherein Lucas Law or its individual attorney(s) are not licensed or authorized to practice law.

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