II

103D CONGRESS

2D SESSION S. 2165

To amend the Internal Revenue Code of 1986 to allow a deduction for

qualified adoption expenses, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 8 (legislative day, JUNE 7), 1994

Mr. RIEGLE (for himself, Mr. JEFFORDS, Mr. HATCH, Mr. STEVENS, and Mr.

COCHRAN) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to allow a

deduction for qualified adoption expenses, and for other

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Fairness for Adopting

5 Families Act’’.

6 SEC. 2. DEDUCTION FOR ADOPTION EXPENSES.

7 (a) DEDUCTION FOR ADOPTION EXPENSES.—

8 (1) IN GENERAL.—Part VII of subchapter B of

9 chapter 1 of the Internal Revenue Code of 1986 (re-
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1 lating to additional itemized deductions for individ2 uals) is amended by redesignating section 220 as

3 section 221 and by inserting after section 219 the

4 following new section:

5 ‘‘SEC. 220. ADOPTION EXPENSES.

6 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an

7 individual, there shall be allowed as a deduction for the

8 taxable year the amount of the qualified adoption expenses

9 paid or incurred by the taxpayer during such taxable year.

10 ‘‘(b) LIMITATIONS.—

11 ‘‘(1) DOLLAR LIMITATION.—The aggregate

12 amount allowable as a deduction under subsection

13 (a) for all taxable years with respect to the legal

14 adoption of any single child by the taxpayer shall

15 not exceed $5,000 ($7,000, in the case of an inter16 national adoption).

17 ‘‘(2) INCOME LIMITATION.—The amount allow18 able as a deduction under subsection (a) for any tax19 able year shall be reduced (but not below zero) by

20 an amount which bears the same ratio to the

21 amount so allowable (determined without regard to

22 this paragraph but with regard to paragraph (1))

23 as—

24 ‘‘(A) the amount (if any) by which the tax25 payer’s taxable income (determined without re-
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1 gard to this section and section 137) exceeds

2 $60,000, bears to

3 ‘‘(B) $10,000.

4 ‘‘(3) DENIAL OF DOUBLE BENEFIT.—

5 ‘‘(A) IN GENERAL.—No deduction shall be

6 allowed under subsection (a) for any expense

7 for which a deduction or credit is allowable

8 under any other provision of this chapter.

9 ‘‘(B) GRANTS.—No deduction shall be al10 lowed under subsection (a) for any expenses

11 paid from any funds received under any Fed12 eral, State, or local program.

13 ‘‘(C) EMPLOYER PROGRAM.—No deduction

14 shall be allowed under subsection (a) for any

15 expenses paid by an employer which are exclud16 ible from gross income under section 137(a).

17 ‘‘(c) QUALIFIED ADOPTION EXPENSES.—For pur18 poses of this section:

19 ‘‘(1) IN GENERAL.—The term ‘qualified adop20 tion expenses’ means reasonable and necessary adop21 tion fees (including agency fees), court costs, attor22 ney fees, and other expenses which—

23 ‘‘(A) are directly related to the legal adop24 tion of a child by the taxpayer but only if such

25 adoption has been arranged—
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1 ‘‘(i) by a State or local agency with

2 responsibility under State or local law for

3 child placement through adoption,

4 ‘‘(ii) by a non-profit, voluntary adop5 tion agency which is authorized by State or

6 local law to place children for adoption, or

7 ‘‘(iii) through a private placement,

8 and

9 ‘‘(B) are not incurred in violation of State

10 or Federal law.

11 ‘‘(2) ADOPTION EXPENSES NOT TO INCLUDE

12 CERTAIN AMOUNTS.—The term ‘qualified adoption

13 expenses’ shall not include any expenses in connec14 tion with—

15 ‘‘(A) the adoption by an individual of a

16 child who is the child of such individual’s

17 spouse, or

18 ‘‘(B) travel outside the United States, un19 less such travel is required—

20 ‘‘(i) as a condition of a legal adoption

21 by the country of the child’s origin,

22 ‘‘(ii) to assess the health and status of

23 the child to be adopted, or

24 ‘‘(iii) to escort the child to be adopted

25 to the United States.
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1 ‘‘(3) CHILD.—The term ‘child’ means an indi2 vidual who at the time of adoption under this section

3 has not attained the age of 18.’’.

4 (2) CLERICAL AMENDMENT.—The table of sec5 tions for such part VII is amended by striking the

6 item relating to section 220 and inserting the

7 following:

‘‘Sec. 220. Adoption expenses.

‘‘Sec. 221. Cross reference.’’.

8 (b) DEDUCTION ALLOWED IN COMPUTING AD9 JUSTED GROSS INCOME.—Subsection (a) of section 62 of

10 such Code is amended by adding after paragraph (15) the

11 following new paragraph:

12 ‘‘(16) ADOPTION EXPENSES.—The deduction

13 allowed by section 220.’’.

14 (c) ADOPTION ASSISTANCE PROGRAMS.—

15 (1) IN GENERAL.—Part III of subchapter B of

16 chapter 1 of such Code (relating to items specifically

17 excluded from gross income) is amended by redesig18 nating section 137 as section 138 and by inserting

19 after section 136 the following new section:

20 ‘‘SEC. 137. ADOPTION ASSISTANCE PROGRAMS.

21 ‘‘(a) IN GENERAL.—Gross income of an employee

22 does not include amounts paid or expenses incurred by the

23 employer for qualified adoption expenses in connection

24 with the adoption of a child by an employee if such
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1 amounts are furnished pursuant to an adoption assistance

2 program.

3 ‘‘(b) LIMITATIONS.—

4 ‘‘(1) DOLLAR LIMITATION.—The aggregate

5 amount excludable from gross income under sub6 section (a) for all taxable years with respect to the

7 legal adoption of any single child by the taxpayer

8 shall not exceed the excess (if any) of $5,000

9 ($7,000 in the case of an international adoption).

10 ‘‘(2) INCOME LIMITATION.—The amount ex11 cludable from gross income under subsection (a) for

12 any taxable year shall be reduced (but not below

13 zero) by an amount which bears the same ratio to

14 the amount so excludable (determined without re15 gard to this paragraph but with regard to paragraph

16 (1)) as—

17 ‘‘(A) the amount (if any) by which the tax18 payer’s taxable income (determined without re19 gard to this section and section 220) exceeds

20 $60,000, bears to

21 ‘‘(B) $10,000.

22 ‘‘(c) ADOPTION ASSISTANCE PROGRAM.—For pur23 poses of this section, an adoption assistance program is

24 a plan of an employer—
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1 ‘‘(1) under which the employer provides employ2 ees with adoption assistance, and

3 ‘‘(2) which meets requirements similar to the

4 requirements of paragraphs (2), (3), and (5) of sec5 tion 127(b).

6 ‘‘(d) QUALIFIED ADOPTION EXPENSES.—For pur7 poses of this section, the term ‘qualified adoption ex8 penses’ has the meaning given such term by section

9 220(c).’’.

10 (2) CLERICAL AMENDMENT.—The table of sec11 tions for such part III is amended by striking the

12 item relating to section 137 and inserting the

13 following:

‘‘Sec. 137. Adoption assistance programs.

‘‘Sec. 138. Cross reference to other Acts.’’.

14 SEC. 3. EFFECTIVE DATE.

15 The amendments made by this Act shall apply to tax16 able years beginning after December 31, 1993.

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