have a client that started an adoption in 2010. In 2011 the birth mother pulled out (failed adoption, no credit). Mother changed her mind in 2012 and adoption was final in that year. have expenses related to the adoption for all three years. Applied for adoption credit in 2012 and was denied. The reasoning in the IRS letter is a little strange. Sounds like they want an adoption credit filed for 2010. Am I correct in thinking that they may just be comfused or am I thinking this out wrong?
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I assume since you say "failed adoption, no credit" that this is not a domestic adoption??
A couple differences -
1) Domestic - You may claim expenses even if the adoption failed
2) Domestic - You claim expenses paid before the year finalized, in the following year.
3) Foreign adoptions - you must finalize the adoption before you can claim any expenses, and they are all claimed the year the adoption is final.
If this was a domestic adoption, you should claim the expenses in multiple years.
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