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Daddy Warbucks is in the process of adopting Annie from a New York orphanage. He pays...

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Finance

Daddy Warbucks is in the process of adopting Annie from a NewYork orphanage. He pays $7,000 in 2017, and $7,500 in 2018. DaddyWarbucks’ AGI for 2018 is $165,000. ?

a. How much is theadoption credit that Daddy Warbucks may claim for 2018 if theadoption becomes final in 2018?

b. How much is theadoption credit that Daddy Warbucks may claim for 2018 if theadoption becomes final in 2019?

c. How much is theadoption credit that Daddy Warbucks may claim for 2018 if theadoption falls through and is never finalized?

Answer & Explanation Solved by verified expert
4.5 Ratings (861 Votes)
Solution As per Internal Revenue ServiceIRS Topic Number 607 Adoption Credit and Adoption Assistance Programs rule Tax benefit is provided on satisfactions of below mentioned conditions Its a Qualified Adoption expense viz adoption fees attorney fees travelling expenses other expenses directly related to child adoption The child is an eligible child ie one below 18 years of age Modified Adjusted gross Income AGI is below 207140 Adoption is finalized ie it is expected that adoption will materialize Adoption if domesticexpenses can be allowed in every subsequent year of expense incurred upto 13810    See Answer
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Transcribed Image Text

Daddy Warbucks is in the process of adopting Annie from a NewYork orphanage. He pays $7,000 in 2017, and $7,500 in 2018. DaddyWarbucks’ AGI for 2018 is $165,000. ?a. How much is theadoption credit that Daddy Warbucks may claim for 2018 if theadoption becomes final in 2018?b. How much is theadoption credit that Daddy Warbucks may claim for 2018 if theadoption becomes final in 2019?c. How much is theadoption credit that Daddy Warbucks may claim for 2018 if theadoption falls through and is never finalized?

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