Fairness for Adopting Families Act

Summary: Fairness for Adopting Families Act - Amends the Internal Revenue Code to permit an individual income tax deduction for qualified adoption expenses.  Makes deductible reasonable and necessary expenses that are directly related to a legal adoption of any child if the adoption has been arranged by a State, local, or other nonprofit agency or through a private placement. 
Excludes from an employee's gross income any amounts paid on behalf of the employee by an employer pursuant to a qualified adoption assistance program. 
Limits both the deduction and the exclusion to $5,000 ($7,000 in the case of an international adoption).  Reduces the amount when the taxpayer's income exceeds $60,000. 
Permits an employer to treat an adoption assistance program as a statutory employee benefit plan, thus making the employer's contributions to such a program tax deductible as business expenses.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fairness for Adopting Families 
Act''.

SEC. 2. DEDUCTION FOR ADOPTION EXPENSES.

    (a) Deduction for Adoption Expenses.--
            (1) In general.--Part VII of subchapter B of chapter 1 of 
        the Internal Revenue Code of 1986 (relating to additional 
        itemized deductions for individuals) is amended by 
        redesignating section 220 as section 221 and by inserting after 
        section 219 the following new section:

``SEC. 220. ADOPTION EXPENSES.

    ``(a) Allowance of Deduction.--In the case of an individual, there 
shall be allowed as a deduction for the taxable year the amount of the 
qualified adoption expenses paid or incurred by the taxpayer during 
such taxable year.
    ``(b) Limitations.--
            ``(1) Dollar limitation.--The aggregate amount allowable as 
        a deduction under subsection (a) for all taxable years with 
        respect to the legal adoption of any single child by the 
        taxpayer shall not exceed $5,000 ($7,000, in the case of an 
        international adoption).
            ``(2) Income limitation.--The amount allowable as a 
        deduction under subsection (a) for any taxable year shall be 
        reduced (but not below zero) by an amount which bears the same 
        ratio to the amount so allowable (determined without regard to 
        this paragraph but with regard to paragraph (1)) as--
                    ``(A) the amount (if any) by which the taxpayer's 
                taxable income (determined without regard to this 
                section and section 137) exceeds $60,000, bears to
                    ``(B) $10,000.
            ``(3) Denial of double benefit.--
                    ``(A) In general.--No deduction shall be allowed 
                under subsection (a) for any expense for which a 
                deduction or credit is allowable under any other 
                provision of this chapter.
                    ``(B) Grants.--No deduction shall be allowed under 
                subsection (a) for any expenses paid from any funds 
                received under any Federal, State, or local program.
                    ``(C) Employer program.--No deduction shall be 
                allowed under subsection (a) for any expenses paid by 
                an employer which are excludible from gross income 
                under section 137(a).
    ``(c) Qualified Adoption Expenses.--For purposes of this section:
            ``(1) In general.--The term `qualified adoption expenses' 
        means reasonable and necessary adoption fees (including agency 
        fees), court costs, attorney fees, and other expenses which--
                    ``(A) are directly related to the legal adoption of 
                a child by the taxpayer but only if such adoption has 
                been arranged--
                            ``(i) by a State or local agency with 
                        responsibility under State or local law for 
                        child placement through adoption,
                            ``(ii) by a non-profit, voluntary adoption 
                        agency which is authorized by State or local 
                        law to place children for adoption, or
                            ``(iii) through a private placement, and
                    ``(B) are not incurred in violation of State or 
                Federal law.
            ``(2) Adoption expenses not to include certain amounts.--
        The term `qualified adoption expenses' shall not include any 
        expenses in connection with--
                    ``(A) the adoption by an individual of a child who 
                is the child of such individual's spouse, or
                    ``(B) travel outside the United States, unless such 
                travel is required--
                            ``(i) as a condition of a legal adoption by 
                        the country of the child's origin,
                            ``(ii) to assess the health and status of 
                        the child to be adopted, or
                            ``(iii) to escort the child to be adopted 
                        to the United States.
            ``(3) Child.--The term `child' means an individual who at 
        the time of adoption under this section has not attained the 
        age of 18.''.
            (2) Clerical amendment.--The table of sections for such 
        part VII is amended by striking the item relating to section 
        220 and inserting the following:

                              ``Sec. 220. Adoption expenses.
                              ``Sec. 221. Cross reference.''.
    (b) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 of such Code is amended by adding after 
paragraph (15) the following new paragraph:
            ``(16) Adoption expenses.--The deduction allowed by section 
        220.''.
    (c) Adoption Assistance Programs.--
            (1) In general.--Part III of subchapter B of chapter 1 of 
        such Code (relating to items specifically excluded from gross 
        income) is amended by redesignating section 137 as section 138 
        and by inserting after section 136 the following new section:

``SEC. 137. ADOPTION ASSISTANCE PROGRAMS.

    ``(a) In General.--Gross income of an employee does not include 
amounts paid or expenses incurred by the employer for qualified 
adoption expenses in connection with the adoption of a child by an 
employee if such amounts are furnished pursuant to an adoption 
assistance program.
    ``(b) Limitations.--
            ``(1) Dollar limitation.--The aggregate amount excludable 
        from gross income under subsection (a) for all taxable years 
        with respect to the legal adoption of any single child by the 
        taxpayer shall not exceed the excess (if any) of $5,000 ($7,000 
        in the case of an international adoption).
            ``(2) Income limitation.--The amount excludable from gross 
        income under subsection (a) for any taxable year shall be 
        reduced (but not below zero) by an amount which bears the same 
        ratio to the amount so excludable (determined without regard to 
        this paragraph but with regard to paragraph (1)) as--
                    ``(A) the amount (if any) by which the taxpayer's 
                taxable income (determined without regard to this 
                section and section 220) exceeds $60,000, bears to
                    ``(B) $10,000.
    ``(c) Adoption Assistance Program.--For purposes of this section, 
an adoption assistance program is a plan of an employer--
            ``(1) under which the employer provides employees with 
        adoption assistance, and
            ``(2) which meets requirements similar to the requirements 
        of paragraphs (2), (3), and (5) of section 127(b).
    ``(d) Qualified Adoption Expenses.--For purposes of this section, 
the term `qualified adoption expenses' has the meaning given such term 
by section 220(c).''.
            (2) Clerical amendment.--The table of sections for such 
        part III is amended by striking the item relating to section 
        137 and inserting the following:

                              ``Sec. 137. Adoption assistance programs.
                              ``Sec. 138. Cross reference to other 
                                        Acts.''.

SEC. 3. EFFECTIVE DATE.

    The amendments made by this Act shall apply to taxable years 
beginning after December 31, 1993.