26 U.S.C. § 23: Adoption expenses

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. 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 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. 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. So much of the credit allowed under paragraph (1) as does not exceed $5,000 shall be treated as a credit allowed under subpart C and not as a credit allowed under this subpart. 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. the amount (if any) by which the taxpayer’s adjusted gross income exceeds $150,000, bears to $40,000. For purposes of subparagraph (A), adjusted gross income shall be determined without regard to sections 911, 931, and 933. 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. 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. If the portion of the credit allowable under subsection (a) which is allowed under this subpart for any taxable year exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section and section 25D), such excess shall be carried to the succeeding taxable year and added to the portion of the credit allowable under subsection (a) which is allowed under this subpart for such taxable year. 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. which are directly related to, and the principal purpose of which is for, the legal adoption of an eligible child by the taxpayer, which are not incurred in violation of State or Federal law or in carrying out any surrogate parenting arrangement, 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 which are not reimbursed under an employer program or otherwise. has not attained age 18, or is physically or mentally incapable of caring for himself. a State or Indian tribal government has determined that the child cannot or should not be returned to the home of his parents, such State or Indian tribal government 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 such child is a citizen or resident of the United States (as defined in section 217(h)(3)). subsection (a) shall not apply to any qualified adoption expense with respect to such adoption unless such adoption becomes final, and 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. Rules similar to the rules of paragraphs (2), (3), and (4) of section 21(e) shall apply for purposes of this section. 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. 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. 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. such dollar amount, multiplied by 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 2016” in subparagraph (A)(ii) thereof. If any amount as increased under paragraph (1) is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10. by substituting “2025” for “2002” in the matter preceding subparagraph (A), and by substituting “calendar year 2024” for “calendar year 2001” in subparagraph (B) thereof. 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). Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 24, 25B, 25D, 26, and 45 of this title] shall apply to taxable years beginning after December 31, 2007 . The amendments made by subsection (b) [amending section 25D of this title ] shall apply to taxable years beginning after December 31, 2008 . The amendments made by subparagraphs (A) and (B) of subsection (e)(2) [amending this section and section 24 of this title ] shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 [ Pub. L. 107–16, § 901 , which was repealed by Pub. L. 112–240, title I, § 101(a)(1) , Jan. 2, 2013 , 126 Stat. 2315 , was formerly set out as an Effective and Termination Dates of 2001 Amendment note under section 1 of this title ] in the same manner as the provisions of such Act to which such amendments relate.” Except as provided in paragraphs (2) and (3), the amendments made by this section [see Tables for classification] shall take effect as if included in the provisions of the Energy Policy Act of 2005 [ Pub. L. 109–58 ] to which they relate. The amendments made by subsection (a) [amending sections 121, 246, 247, 1223, 1245, and 1250 of this title and repealing sections 1081 to 1083 of this title] shall not apply with respect to any transaction ordered in compliance with the Public Utility Holding Company Act of 1935 [ 15 U.S.C. 79 et seq.] before its repeal. The amendments made by subsection (i)(3) [amending this section and sections 24, 25, 25B, 25D, 904, and 1400C of this title] shall apply to taxable years beginning after December 31, 2005 .” Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 24, 26, 137, 904, and 1400C of this title] shall apply to taxable years beginning after December 31, 2001 . The amendments made by subsection (a) [amending this section and section 137 of this title ] shall apply to taxable years beginning after December 31, 2002 .” Except as provided in paragraph (2), the amendments made by this section [amending this section, sections 30A, 52, 55, 137, 401, 403, 404, 408, 414, 512, 529, 593, 641, 679, 860L, 956, 1361, 1374, 4001, 4041, 4092, 4261, 6039D, 6048, 6050R, 6501, 6693, 7701, and 9503 of this title, section 1055 of Title 29 , Labor, and provisions set out as notes under sections 529 and 4091 of this title] shall take effect as if included in the provisions of the Small Business Job Protection Act of 1996 [ Pub. L. 104–188 ] to which they relate. The amendment made by subsection (d)(2)(D) [amending section 401 of this title ] shall apply to calendar years beginning after the date of the enactment of this Act [ Aug. 5, 1997 ].” any transaction occurring before the date of the enactment of this Act [ Mar. 23, 2018 ], any property acquired before such date of enactment, or any item of income, loss, deduction, or credit taken into account before such date of enactment, and the treatment of such transaction, property, or item under such provision would (without regard to the amendments or repeals made by such subsection) affect the liability for tax for periods ending after such date of enactment,