Aug 1, 2011 12:00 PM

By Laura H. Peebles, tax director in the Washington, D.C. office of Deloitte Tax LLP

Precedents, those cases we look back to again and again for guidance when preparing returns or preparing for an Internal Revenue Service audit, aren't typically pro se cases. Van Dusen,¹ decided in early June 2011, is an exception. Jan Elizabeth Van Dusen cared for feral cats in her home under the aegis of a charitable organization, Fix Our Ferals.² She deducted the cost of caring for them as an out-of-pocket charitable expense. Upon audit, the IRS denied the deductibility of the expenses. In 42 pages, Judge Richard T. Morrison gave us guidance on three aspects of charitable giving, all of them important to the millions of Americans who spend their time and money on the causes they care about.

The first issue, and the one that seems to have attracted the most attention in the popular press, is the deductibility of out-of-pocket expenses incurred by volunteers for animal rescue organizations. Although Van Dusen took in cats, animal rescue organizations exist for dogs, turtles, ferrets, lizards, birds, fish and other exotic pets. The principles spelled out in this case would apply equally to any animal rescue volunteer. Many of these organizations work in the same manner as Fix Our Ferals: the organization is mostly virtual, composed of a website and a network of dedicated volunteers. (Of course, to justify any deduction, the IRS must have recognized the organization's tax-exempt status.) The type of expenses Van Dusen incurred would be familiar to anyone with even one animal: vet bills, food, paper towels and other cleaning supplies. The case holds that Van Dusen incurred these expenses in furtherance of the organization's goals, and therefore they were deductible as out-of-pocket expenses incurred in connection with volunteering.³

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
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Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

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2011 Trust Glossary

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50 Years Ago This Month

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50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

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