§ 36C. 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—
(3)
$13,170 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 $13,170 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 $13,170.
(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—
(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,
(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
(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))—
(f)
Filing requirements
(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
(1)
Dollar limitations
In the case of a taxable year beginning after December 31, 2010, each of the dollar amounts in subsections (a)(3) and (b)(1) shall be increased by an amount equal to—
(B)
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 2009” 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.
(2)
Income limitation
In the case of a taxable year beginning after December 31, 2002, the dollar amount in subsection (b)(2)(A)(i) shall be increased by an amount equal to—
(B)
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).