Brad and Valerie decided to adopt a child and contacted an adoption agency in August 2016. 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 2017, 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 2016 was $70,000, and in 2017 was $90,000.

a. Compute Brad and Valerie€™s qualified adoption expenses for each year.

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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2016: 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 $5,000 1,500 300 1,000 250 Agency fees (final installment) Travel expenses Court costs for adoption Kennel fees Nursery furniture (baby's room) and supplies $4,000 400 2017: 1,500 100 2,000