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Nonprofit Law/501c Non-Profit Pet Rescue

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Question
Over the years my husband and I have rescued many cats and dogs in need. (Strays, rescues from shelters, animals needing medical attention…etc…) We have also fostered animals and provided medical care for them and then re-homed a few. We currently have 9-dogs and  13-cats.

Since we have no intentions of ever turning an animal in need away and will continue to rescue and provide care as we can afford, we have considered filing for 501c status as a non-profit rescue.
My question is, if we become a 501c non-profit rescue, what things will be tax deductible?

For instance, we spend on an average of $12,000.00 per year on food. Would food be deductible?

We heat the dog and cat houses for the ones that stay outside. Can a percentage of the utilities be claimed?

I want to build a heated and cooled kennel for the animals outside. Would building the kennel solely for the animals be deductible?

Medical care is averaging us around $8,000.00 per year. Is medical care for the animals deductible?

Any information and advice is greatly appreciated.
Thank you.

Answer
The IRS rule for what nonprofits may spend money on is similar to
the standard that the IRS uses when determining what is a valid
business expense for an ordinary business. For example, at:
http://www.irs.gov/pub/irs-tege/eotopich02.pdf the IRS refers
extensively to the regular business expense rules and applies them
to 501(c)(3) organizations. On page 32 we see "Reimbursements are
technically covered by Regs. 1.62-2.  However, for administrative
purposes, all TE/GE [Tax Exempt & Government Entities Division]
administrative personnel will treat reimbursements of a business
expense the same as if the expense were paid directly by the
employer, as long as the employee complies with the substantiation
rules..."
See also:
http://www.irs.gov/pub/irs-pdf/p535.pdf "Business Expenses"
on page 3, under "What Can I Deduct"
--start of excerpt  ---
To be deductible, a business expense must be
both ordinary and necessary. An ordinary ex-
pense is one that is common and accepted in
your industry. A necessary expense is one that
is helpful and appropriate for your trade or busi-
ness. An expense does not have to be indispen-
sable to be considered necessary.
--end of excerpt  ---

All of the items that you mentioned are necessary expenses.  The only item that would be difficult to account for is the portion of the utility bill that is shared with humans and animals.  If you get a separate meter for the animal use, then that would also be a valid expense, accounted for properly.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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