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 what year(s) will they benefit from the 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?