November 01, 2012 | Written by: Jonathan Crosby, EA
Sometimes faith in what’s right pays off. This was the case for a recent adoption credit examination we defended for one of our members in Wisconsin.
The Members were in the process of trying to adopt a child and had incurred $10,720 in adoption expenses that they’d claimed on their 2011 tax return. The issue was that there was no child yet to list on their Qualified Adoption Expenses Form 8839, just the hope of one day finding that special child. With the thought that the IRS examiner might try to disallow this couple’s adoption credit, we realized a strong case needed to be made for the Members. We went straight to work.
We started out by collecting the required support documentation. The Members were able to provide a copy of the home study completed by an authorized placement agency, a copy of a notarized adoption agreement, and copies of cancelled checks for adoption fees. But even with all of this, the Members still didn’t have a name to enter on the form. Without a name we were running into a roadblock, but that didn’t stop us for long.
Like all good tax professionals we looked to the Internal Revenue Tax Code for help, and there in “USC, Title 26, section 36C-Adoption Expenses subparagraph (f)(2)(B) Taxpayer must include TIN” was the answer: “The secretary may, in lieu of the information referred to in subparagraph (A), require other information meeting the purposes of this of subparagraph (A), including identification of an agent assisting with the adoption.”
A copy of this section of the code accompanied our response letter. The examiner had to agree and issued a letter making no changes to the originally filed return. The Members’ refund was promptly deposited into their account, which was a nice ending to our noble pursuit.
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