Question

Carl and Jenny adopt a Korean orphan. The adoption takes 2 years and two trips to Korea and is finalized in 2017. They pay $7,000 in 2016 and $7,500 in 2017 for qualified adoption expenses. In 2017, Carl and Jenny have AGI of $150,000. If an amount is zero, enter "0". If required, carry any division out to four decimal places and round final answers to the nearest dollar. a. What is the adoption credit Carl and Jenny can claim in 2017? $ b. How much credit could they claim if the adoption falls through and is never finalized? $ c. How much credit could they claim if their AGI was $206,540? $

Answer 1

A) As per IRS, In 2017, If MAGI Amount is Less Than $203540, Than Your credit or exclusion

won't be affected by the MAGI phaseout, Where as

MAGI Amount is $243540 or More, your credit or exclusion will be zero.

AGI is $150000

The Maximum amount for credit in 2017 is $13570 per child.

The couple incurred more expenses than the limit, credit would be limited to $13570 only.

B). The Credit Zero, as the adoption is of foreign child and it is not succeful.

C) Amount of Credit Which is Claim :-

Particulars	Amount($)
AGI	206540
Phaseout for 2017	203540
Difference	3000
Deduction (($3000*$13570)/$40000)	1017.75
Maximum Credit ($13570 - $1017.75)	12552.25