Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 8

Niles and Marsha adopted a little boy (a U.S. citizen). They paid $6,000 in 2008 and $7,700 in 2009 for adoption-related expenses. The adoption was final in early 2010. Marsha received $3,000 of employer-provided adoption benefits. For question a assume that any adoption credit is not limited by modified AGI or by the amount of tax liability.
a. What amount of adoption credit, if any, can Niles and Marsha take in 2008 and 2009?
b. Using the information in (a), assume that their modified AGI was $199,000 in 2009. What amount of adoption credit is permitted in 2009?