The trustee will have to pay tax. The funding of the trust will be subject to either gift or estate tax. The IRS held in Revenue Ruling 87-105, 1978-1 CB 295 that no portion of the amount passing to a valid pet trust for the lifetime benefit of a pet qualifies for the charitable estate tax deduction, even if the remainder beneficiary is a qualifying charity. Therefore, if the funding of the trust is subsequent, the pet owner should stipulate how the taxes attributable to the pet trust should be paid under the federal and state apportionment rules. Revenue Ruling 76-486, 1976-2 CB 192 clarified that a pet trust is also subject to income tax and a fiduciary income tax return is required to be filed if the net taxable trust income exceeds $100. Under federal law, the pet caregiver is considered the beneficiary of the trust. The care expenses are not deductible because they are not income-producing asset and are not related to the normal business of the administration of the trust.