Brad and Valerie decided to adopt a child and contacted an adoption agency in August 2014. 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 2015, 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 2014 was $70,000, and in 2015 was $90,000.
a. Compute Brad and Valerie€™s qualified adoption expenses for 2014 and 2015
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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2014 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 Agency fees (final installment) Travel expenses $5,000 1,500 300 1,000 250 2015 $4,000 400 Court costs for adoption 1,500 Kennel fees 100 Nursery furniture (baby's room) and supplies 2,000