Brad and Valerie decided to adopt a child and contacted an adoption agency in August 2017. After extensive interviews and other requirements (such as financial status, etc.), Brad and Valerie were approved as eligible parents to adopt a child. The agency indicated that it might take up to two years to find a proper match. In March 2018, the adoption became final, and Brad and Valerie adopted an infant daughter (not a special needs child). Below is a list of expenses that they incurred:

Brad and Valerie's AGI in 2017 was $70,000, and in 2018 was $90,000.

a. Compute Brad and Valerie's qualified adoption expenses for each year.

b. Compute Brad and Valerie's adoption credit. In which year(s) may the credit be taken?

c. Would your answer to Part b change if the adopted child was a special needs child and if a grant covered all adoption cost except for legal fees?

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Agency fees (first installment) Travel expenses for interviews, etc. Publications for prospective adoptive parents Legal fees connected with the adoption Kennel fees for dog while on adoption trips $5,000 1,500 300 2017: 1,000 250 Agency fees (final installment) Travel expenses Court costs for adoption $4,000 2018: 400 1,500 100 Kennel fees Legal fees connected with the adoption Nursery furniture (baby's room) and supplies 1,000 2,000