Volunteers who contribute their time, the most valuable asset of all, certainly are not motivated by tax breaks. Many of these Most Valuable Philanthropists probably are unaware that their unreimbursed expenses are deductible contributions for itemizers.

A recent tax court case (Van Dusen, 136 T.C. No. 25 2011), involving only $4,838 in income taxes, is a virtual primer on the deductibility of unreimbursed volunteers expenses.

The long, detailed and scholarly court opinion shows that the busy courts take these issues seriously, regardless of the amounts involved.


The IRS disallowed the donor’s claimed volunteer expenses. The tax court first lays out the rules for the types of expenses that are deductible. The facts in this case are both fascinating and crucial to the court’s decision.

The donor cared for cats in her house. She volunteered for Fix Our Ferals (FOF) and deducted her out-of-pocket expenses for cat-care as contributions to FOF, an IRC §501(c)(3) charity.

FOF’s mission, through volunteers, is to engage in “trap-neuter-return” activities — trapping feral cats, neutering them, obtaining necessary medical treatments and vaccinations, and releasing them back into the wild. The purpose of this process is to humanely control feral cat populations and ensure that the cats live in an environment where people are not hostile to them.

After being neutered, the cats are temporarily housed in volunteers’ homes while they recover before being returned to the wild. Cats that cannot be safely returned to the wild must be cared for domestically. FOF refers to all care for trapped cats, including temporary housing while cats are recuperating from neutering, as “foster care” and those cats are “foster cats.”

The donor’s role with the FOF was to trap feral cats, have them neutered, obtain vaccinations and necessary medical treatments, house them while they recuperated and release them back into the wild. She also provided long-term foster care to cats in her home. Some foster cats stayed with her indefinitely.

In 2004, the tax year in question, the donor had between 70 and 80 cats, of which approximately seven were pets. The pet cats had names, but the foster cats generally did not.

The donor devoted essentially her entire life outside of work to caring for the cats. Each day she fed, cleaned and looked after them.

She paid out-of-pocket for neuterings, other veterinary expenses, including tests, treatment, vaccines and surgery. She also expended significant amounts on in-home care, for example, pet and cleaning supplies. She incurred higher electricity and gas bills because she laundered many loads of cat bedding and ran a special ventilation system to ensure fresh air. Her water and garbage bills were also increased.

Tax Court Opinion

Caring for foster cats was a service to FOF. A typical charitable contribution is donating money or property directly to a charity. Another type of contribution is performing services for a charity and incurring unreimbursed expenses. No deduction is allowable for a contribution of services, but unreimbursed expenditures made incident to the rendition of services to a qualified charity may be deductible. Treas. Reg. §1.170A-1(g).

The donor maintained her expenses were “expenditures made incident to the rendition of services” to FOF.

The IRS contended that she was an independent cat rescue worker whose services were unrelated to FOF and did not benefit the organization.

Tax Court Finds Donor’s Care for Foster Cats Constituted Services to FOF

In determining whether a taxpayer has provided services to a particular organization, courts consider the strength of the taxpayer’s affiliation with the organization, the organization’s ability to initiate or request services from the taxpayer, the organization’s supervision over the taxpayer’s work and the taxpayer’s accountability to the organization.

In this case, the court said the donor has demonstrated a strong connection with FOF. She was a regular FOF volunteer who performed substantial services for the organization. She engaged in both trapping and foster care and worked closely with other FOF volunteers.

Non-deductible expenses: To be deductible, unreimbursed expenses must be directly connected with and solely attributable to the rendition of services to a charitable organization. In applying this standard, courts have considered whether the charitable work caused or necessitated the taxpayer’s expenses.

For example, in Orr, 343 F.2d 553 (Fifth Cir.1965), the court disallowed deductions for the expenses of insuring and repairing two vehicles because the expenses were not solely attributable to charitable use. The taxpayer had used the vehicles partly for personal use and would have incurred the expenses regardless of any charitable work.

Not deductible by donor: Costco membership dues, pet-cat cremation expense, bar association dues, DMV fees and wet/dry vacuum repair. The donor did not show those expenses were incurred for her charitable work.

One broad category of the donor’s expenses — veterinary expenses, pet supplies, cleaning supplies and utilities — was partly incidental to her services to FOF. If the donor had not fostered cats, she would have paid for fewer veterinary services, fewer pet supplies and fewer cleaning supplies. Her utility bills would have been significantly lower because she would not have had to run a special ventilation system, do as much laundry, or dispose of as much cat waste.

The court ruled that the portions of those expenses attributable to caring for foster cats were directly connected with and solely attributable to her services to FOF. So the court allowed a deduction for a percentage of those expenses.

The court went into a long discussion of the record-keeping requirements for substantiating charitable gifts. It found that the donor met some of the requirements, but not others. And in some cases, she substantially complied.

Dwelling unit expenses. Internal Revenue Code §280(A)(a) provides that for individual taxpayers “no deduction otherwise allowable shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence.” IRC §280A(b) contains an exception to IRC §280A(a). It provides: “Subsection (a) shall not apply to any deduction allowable to the taxpayer without regard to its connection with his trade or business (or with his income-producing activity).” The IRS argued that IRC §280A forbids a donor from claiming a charitable deduction for a portion of her household utility bills. The court held, however, that IRC §280A does not affect the deductibility of the donor’s expenses. Her expenses would be deductible without regard to any connection with a trade or business.

Let’s conclude with an arcane but important point. Rockefeller, 676 F.2d 35, 42 (2d Cir. 1982), held that unreimbursed volunteer expenses were contributions “to” a charitable organization and not “for the use” of a charity. The adjusted-gross-income deductibility ceiling is higher for gifts “to” a charity than it is “for the use of” a charity. See also Davis, 495 U.S. 472 (1990). In this case, the court held that the donor’s unreimbursed volunteer expenses were gifts “to” FOF and not gifts for “the use of” FOF.