A bill to amend the Internal Revenue Code of 1986 to expand the adoption credit, and for other purposes.

Summary: Hope for Children Act - Amends the Internal Revenue Code to increase the expenses allowable towards the adoption credit.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Hope for Children Act''.

SEC. 2. EXPANSION OF ADOPTION CREDIT AND ADOPTION ASSISTANCE PROGRAMS.

    (a) In General.--
            (1) Adoption credit.--Section 23(a)(1) of the Internal 
        Revenue Code of 1986 (relating to allowance of credit) is 
        amended to read as follows:
            ``(1) In general.--In the case of an individual, there 
        shall be allowed as a credit against the tax imposed by this 
        chapter--
                    ``(A) in the case of an adoption of a child other 
                than a child with special needs, the amount of the 
                qualified adoption expenses paid or incurred by the 
                taxpayer, and
                    ``(B) in the case of an adoption of a child with 
                special needs, $10,000.''.
            (2) Adoption assistance programs.--Section 137(a) of such 
        Code (relating to adoption assistance programs) is amended to 
        read as follows:
    ``(a) In General.--Gross income of an employee does not include 
amounts paid or expenses incurred by the employer for adoption expenses 
in connection with the adoption of a child by an employee if such 
amounts are furnished pursuant to an adoption assistance program. The 
amount of the exclusion shall be--
            ``(1) in the case of an adoption of a child other than a 
        child with special needs, the amount of the qualified adoption 
        expenses paid or incurred by the taxpayer, and
            ``(2) in the case of an adoption of a child with special 
        needs, $10,000.''.
    (b) Dollar Limitations.--
            (1) Dollar amount of allowed expenses.--
                    (A) Adoption expenses.--Section 23(b)(1) of the 
                Internal Revenue Code of 1986 (relating to allowance of 
                credit) is amended--
                            (i) by striking ``$5,000'' and inserting 
                        ``$10,000'',
                            (ii) by striking ``($6,000, in the case of 
                        a child with special needs)'', and
                            (iii) by striking ``subsection (a)'' and 
                        inserting ``subsection (a)(1)(A)''.
                    (B) Adoption assistance programs.--Section 
                137(b)(1) of such Code (relating to dollar limitations 
                for adoption assistance programs) is amended--
                            (i) by striking ``$5,000'' and inserting 
                        ``$10,000'', and
                            (ii) by striking ``($6,000, in the case of 
                        a child with special needs)'', and
                            (iii) by striking ``subsection (a)'' and 
                        inserting ``subsection (a)(1)''.
            (2) Phase-out limitation.--
                    (A) Adoption expenses.--Clause (i) of section 
                23(b)(2)(A) of such Code (relating to income 
                limitation) is amended by striking ``$75,000'' and 
                inserting ``$150,000''.
                    (B) Adoption assistance programs.--Section 
                137(b)(2)(A) of such Code (relating to income 
                limitation) is amended by striking ``$75,000'' and 
                inserting ``$150,000''.
    (c) Year Credit Allowed.--Section 23(a)(2) of the Internal Revenue 
Code of 1986 (relating to year credit allowed) is amended by adding at 
the end the following new flush sentence:
        ``In the case of the adoption of a child with special needs, 
        the credit allowed under paragraph (1) shall be allowed for the 
        taxable year in which the adoption becomes final.''.
    (d) Repeal of Sunset Provisions.--
            (1) Children without special needs.--Paragraph (2) of 
        section 23(d) of the Internal Revenue Code of 1986 (relating to 
        definition of eligible child) is amended to read as follows:
            ``(2) Eligible child.--The term `eligible child' means any 
        individual who--
                    ``(A) has not attained age 18, or
                    ``(B) is physically or mentally incapable of caring 
                for himself.''.
            (2) Adoption Assistance Programs.--Section 137 of such Code 
        (relating to adoption assistance programs) is amended by 
        striking subsection (f).
    (e) Adjustment of Dollar and Income Limitations for Inflation.--
            (1) Adoption credit.--Section 23 of the Internal Revenue 
        Code of 1986 (relating to adoption expenses) is amended by 
        redesignating subsection (h) as subsection (i) and by inserting 
        after subsection (g) the following new subsection:
    ``(h) Adjustments for Inflation.--In the case of a taxable year 
beginning after December 31, 2002, each of the dollar amounts in 
subsection (a)(1)(B) and paragraphs (1) and (2)(A)(i) of subsection (b) 
shall be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for the calendar year in which the taxable year 
        begins, determined by substituting `calendar year 2001' for 
        `calendar year 1992' in subparagraph (B) thereof.''.
            (2) Adoption assistance programs.--Section 137 of such Code 
        (relating to adoption assistance programs), as amended by 
        subsection (d), is amended by adding at the end the following 
        new subsection:
    ``(f) Adjustments for Inflation.--In the case of a taxable year 
beginning after December 31, 2002, each of the dollar amounts in 
subsection (a)(2) and paragraphs (1) and (2)(A) of subsection (b) shall 
be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for the calendar year in which the taxable year 
        begins, determined by substituting `calendar year 2001' for 
        `calendar year 1992' in subparagraph (B) thereof.''.
    (f) Limitation Based on Amount of Tax.--
            (1) In general.--Section 23(c) of the Internal Revenue Code 
        of 1986 (relating to carryforwards of unused credit) is amended 
        by striking ``the limitation imposed'' and all that follows 
        through ``1400C)'' and inserting ``the applicable tax 
        limitation''.
            (2) Applicable tax limitation.--Section 23(d) of such Code 
        (relating to definitions) is amended by adding at the end the 
        following new paragraph:
            ``(4) Applicable tax limitation.--The term `applicable tax 
        limitation' means the sum of--
                    ``(A) the taxpayer's regular tax liability for the 
                taxable year, reduced (but not below zero) by the sum 
                of the credits allowed by sections 21, 22, 24 (other 
                than the amount of the increase under subsection (d) 
                thereof), 25, and 25A, and
                    ``(B) the tax imposed by section 55 for such 
                taxable year.''.
            (3) Conforming amendments.--
                    (A) Section 26(a) of such Code (relating to 
                limitation based on amount of tax) is amended by 
                inserting ``(other than section 23)'' after ``allowed 
                by this subpart''.
                    (B) Section 53(b)(1) of such Code (relating to 
                minimum tax credit) is amended by inserting ``reduced 
                by the aggregate amount taken into account under 
                section 23(d)(3)(B) for all such prior taxable years,'' 
                after ``1986,''.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.