Course-Tax 660

Problem 10-29 (LO. 3)

Ann and Bill were on the list of a local adoption agency for several years, seeking to adopt a child. Finally, in 2016, good news came their way, and an adoption seems imminent. They paid qualified adoption expenses of $5,000 in 2016 and $11,000 in 2017. Assume that the adoption becomes final in 2017. Ann and Bill always file a joint income tax return.

a.Determine the amount of the adoption expenses credit available to Ann and Bill, assuming that their combined annual income is $120,000.

$

In which year(s) will they benefit from the credit?

2017

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Adoption expenses paid or incurred by a taxpayer may give rise to the adoption expenses credit.

b.Assuming that Ann and Bill's modified AGI in 2016 and 2017 is $220,000, calculate the amount of the adoption expenses credit.

In your computations, do not round any division. Round your final answer to the nearest dollar.

The credit is $.