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USC Title 26 enacted through 2008

§ 23. Adoption expenses

 
(a)
Allowance of credit
 
(1)
In general
 
In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer.
 
(2)
Year credit allowed
 
The credit under paragraph (1) with respect to any expense shall be allowed -
 
(A)
in the case of any expense paid or incurred before the taxable year in which such adoption becomes final, for the taxable year following the taxable year during which such expense is paid or incurred, and
 
(B)
in the case of an expense paid or incurred during or after the taxable year in which such adoption becomes final, for the taxable year in which such expense is paid or incurred.
 
(3)
$10,000 credit for adoption of child with special needs regardless of expenses
 
In the case of an adoption of a child with special needs which becomes final during a taxable year, the taxpayer shall be treated as having paid during such year qualified adoption expenses with respect to such adoption in an amount equal to the excess (if any) of $10,000 over the aggregate qualified adoption expenses actually paid or incurred by the taxpayer with respect to such adoption during such taxable year and all prior taxable years.
 
(b)
Limitations
 
(1)
Dollar limitation
 
The aggregate amount of qualified adoption expenses which may be taken into account under subsection (a) for all taxable years with respect to the adoption of a child by the taxpayer shall not exceed $10,000.
 
(2)
Income limitation
 
(A)
In general
 
The amount allowable as a credit under subsection (a) for any taxable year (determined without regard to subsection (c)) shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so allowable (determined without regard to this paragraph but with regard to paragraph (1)) as -
 
(i)
the amount (if any) by which the taxpayer's adjusted gross income exceeds $150,000, bears to
 
(ii)
$40,000.
 
(B)
Determination of adjusted gross income
 
For purposes of subparagraph (A), adjusted gross income shall be determined without regard to sections 911, 931, and 933.
 
(3)
Denial of double benefit
 
(A)
In general
 
No credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter.
 
(B)
Grants
 
No credit shall be allowed under subsection (a) for any expense to the extent that funds for such expense are received under any Federal, State, or local program.
 
(4)
Limitation based on amount of tax
 
In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess of -
 
(A)
the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
 
(B)
the sum of the credits allowable under this subpart (other than this section and section 25D) and section 27 for the taxable year.
 
(c)
Carryforwards of unused credit
 
(1)
Rule for years in which all personal credits allowed against regular and alternative minimum tax
 
In the case of a taxable year to which section 26(a)(2) applies, if the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by section 26(a)(2) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section and sections 25D and 1400C), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.
 
(2)
Rule for other years
 
In the case of a taxable year to which section 26(a)(2) does not apply, if the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by subsection (b)(4) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.
 
(3)
Limitation
 
No credit may be carried forward under this subsection to any taxable year following the fifth taxable year after the taxable year in which the credit arose. For purposes of the preceding sentence, credits shall be treated as used on a first-in first-out basis.
 
(d)
Definitions
 
For purposes of this section -
 
(1)
Qualified adoption expenses
 
The term "qualified adoption expenses" means reasonable and necessary adoption fees, court costs, attorney fees, and other expenses -
 
(A)
which are directly related to, and the principal purpose of which is for, the legal adoption of an eligible child by the taxpayer,
 
(B)
which are not incurred in violation of State or Federal law or in carrying out any surrogate parenting arrangement,
 
(C)
which are not expenses in connection with the adoption by an individual of a child who is the child of such individual's spouse, and
 
(D)
which are not reimbursed under an employer program or otherwise.
 
(2)
Eligible child
 
The term "eligible child" means any individual who -
 
(A)
has not attained age 18, or
 
(B)
is physically or mentally incapable of caring for himself.
 
(3)
Child with special needs
 
The term "child with special needs" means any child if -
 
(A)
a State has determined that the child cannot or should not be returned to the home of his parents,
 
(B)
such State has determined that there exists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance, and
 
(C)
such child is a citizen or resident of the United States (as defined in section 217(h)(3)).
 
(e)
Special rules for foreign adoptions
 
In the case of an adoption of a child who is not a citizen or resident of the United States (as defined in section 217(h)(3)) -
 
(1)
subsection (a) shall not apply to any qualified adoption expense with respect to such adoption unless such adoption becomes final, and
 
(2)
any such expense which is paid or incurred before the taxable year in which such adoption becomes final shall be taken into account under this section as if such expense were paid or incurred during such year.
 
(f)
Filing requirements
 
(1)
Married couples must file joint returns
 
Rules similar to the rules of paragraphs (2), (3), and (4) of section 21(e) shall apply for purposes of this section.
 
(2)
Taxpayer must include TIN
 
(A)
In general
 
No credit shall be allowed under this section with respect to any eligible child unless the taxpayer includes (if known) the name, age, and TIN of such child on the return of tax for the taxable year.
 
(B)
Other methods
 
The Secretary may, in lieu of the information referred to in subparagraph (A), require other information meeting the purposes of subparagraph (A), including identification of an agent assisting with the adoption.
 
(g)
Basis adjustments
 
For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
 
(h)
Adjustments for inflation
 
In the case of a taxable year beginning after December 31, 2002, each of the dollar amounts in subsection (a)(3) and paragraphs (1) and (2)(A)(i) of subsection (b) shall be increased by an amount equal to -
 
(1)
such dollar amount, multiplied by
 
(2)
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting "calendar year 2001" for "calendar year 1992" in subparagraph (B) thereof.
 
If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.
 
(i)
Regulations
 
The Secretary shall prescribe such regulations as may be appropriate to carry out this section and section 137, including regulations which treat unmarried individuals who pay or incur qualified adoption expenses with respect to the same child as 1 taxpayer for purposes of applying the dollar amounts in subsections (a)(3) and (b)(1) of this section and in section 137(b)(1).








Tax Code (Internal Revenue Code) Section Index


U.S. GAAP by Codification Topic
 
105 GAAP Hierarchy
105 GAAP History

205 Presentation of Financial Statements
205-20 Discontinued Operations
210 Balance Sheet
210-20 Offsetting
220 Comprehensive Income
225 Income Statement
225-20 Extraordinary and Unusual Items
230 Statement of Cash Flows
250 Accounting Changes and Error Corrections
260 Earnings per Share
270 Interim Reporting

310 Impairment of a Loan
320 Investment Securities
320 Other-Than-Temporary Impairments, FSP FAS 115-2
320-10-05 Overview of Investments in Other Entities
320-10-35 Reclassification of Investments in Securities
323-10 Equity Method Investments
323-30 Investments in Partnerships and Joint Ventures
325-20 Cost Method Investments
330 Inventory

340-20 Capitalized Advertising Costs
350-20 Goodwill
350-30 Intangibles Other than Goodwill
350-40 Internal-Use Software
350-50 Website Development Costs
360 Property, Plant and Equipment
360-20 Real Estate Sales

410 Asset Retirement and Environmental Obligations
420 Exit or Disposal Cost Obligations
450 Contingencies
450-20 Loss Contingencies
450-30 Gain Contingencies
480 Redeemable Financial Instruments

505-20 Stock Dividends, Stock Splits
505-30 Treasury Stock

605 SEC Staff Accounting Bulletin, Topic 13
605-25 Revenue Recognition - Multiple Element Arrangements

715-30 Defined Benefit Plans - Pension
718 Share-Based Payment
730 Research and Development
730-20 Research and Development Arrangements

805 Business Combinations
810 Consolidation
810 Noncontrolling Interests
810 Consolidation of Variable Interest Entities, SFAS 167

815 Derivatives and Hedging Overview

820 Fair Value Measurements
820 Fair value when the markets are not active, FSP FAS 157-4
825 Fair Value Option

830 Foreign Currency Matters
830-20 Foreign Currency Transactions
830-30 Translation of Financial Statements
835 Interest
835-20 Capitalization of Interest
835-30 Imputation of Interest

840 Leases
840-20 Operating Leases
840-30 Capital Leases
840-40 Sale-Leaseback Transactions
845 Nonmonetary Transactions

855 Subsequent Events
860-20 Sale of Financial Assets, SFAS 166
860-50 Servicing Assets and Liabilities, SFAS 156

985-20 Costs of software to be sold


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