Crazy Cat Lady Takes On IRS

By David Stone, EA

[TaxMama Note: This is the where I first read about the Tax Court case referenced in today’s TaxQuip.  Thanks David! ]

Every town has a crazy cat lady, with way too many cats littering her property. Neighborhood kids walk past the house and wonder if it’s haunted.
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Adults drive past and imagine the interior looks like a scene from Hoarders. But – what if the crazy cat lady is a sharp-as-a-claw attorney who’s not afraid to take on the IRS?

 

Jan Elizabeth Van Dusen is a graduate of UC Hastings College of Law and an attorney in Oakland, CA. She’s also a volunteer for Fix Our Ferals, an IRS-recognized 501(c)(3) nonprofit organization dedicated to providing free spay/neuter clinics for feral cats in San Francisco’s East Bay area. Van Dusen devoted essentially her entire life outside work to the organization.
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She trapped feral cats, had them neutered, obtained vaccinations and necessary medical treatments, housed them while they recuperated, placed some of them for adoption, and released others back into the wild.

In 2004, Van Dusen reported keeping between 70-80 cats – so many, in fact, that she couldn’t recall where they all came from. Seven of the cats were her own pets; the rest were foster cats she cared for as part of her volunteer activity. Most of them roamed freely around her home (except for bathrooms); however, some of the less-domesticated cats stayed in a room called the “feral room” or lived in cages for taming or because of illness. Every day she fed, cleaned, and looked after the cats, laundered their bedding, and sanitized the floors, household surfaces, and cages. She even bought her house “with the idea of fostering in mind.”

Van Dusen also spent a small fortune taking care of the cats, including pet supplies (food, medicine, litter and litter boxes, pet dishes, and other supplies), cleaning supplies (garbage bags, paper towels, laundry and dish detergent, and other similar cleaning supplies), and even higher utility bills from laundering so many loads of cat bedding and running a special ventilation system to ensure fresh air. (Let’s face it, folks, with 80 cats in the house, it had to smell at least a little gamey.) Even her garbage bill went up because of all the cat waste!
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For 2004, Van Dusen claimed $12,068 in noncash charitable contributions for her rescue work on behalf of Fix Our Ferals – $1,381 in supplies, $9,607 in vet bills, and $1,080 in utilities. The IRS shot her down. But tax deductions for foster cats, like Van Dusen’s cats themselves, may really have nine lives – so Van Dusen appealed to the Tax Court and even chose to represent herself.
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Last week, the Court issued a 42-page opinion in Van Dusen v. Commissioner. The Court found that portions of Van Dusen’s veterinary expenses, pet supplies, cleaning supplies, and utilities were “directly connected with and solely attributable to” her services to Fix Our Ferals. After several pages examining the state of Van Dusen’s records (including three full pages on the woodstove pellets she used as cat litter), the Court let her take 90% of her vet bills and 50% of the supplies and utilities. However, charitable contributions of $250 or more must be substantiated with a contemporaneous written record from the charity itself. Since Van Dusen had no such acknowledgment, the Court disallowed all expenses above $250.

You don’t have to be a crazy cat lady to deduct your volunteer expenses. You just have to know the rules. Keep good records! Make sure you get a statement from the organization acknowledging any expenses over $250. And call us with your questions, so we can help you make the most of those often-overlooked deductions!

Helping YOU to STOP WASTING money on taxes!
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David, Drew, Dan, Scott and Cathy
25115 Avenue Stanford, Suite 130
Valencia, CA 91355
(661) 775-6200    Fax (661) 775-6299
www.IRSSolutions.com