Domestic re-adoption is not required for adoption credit

Number

201509037

Outcome

Advice

Document type

Chief Counsel Advice

IRS subject

Domestic Re-Adoption After Final Foreign Adoption; Adoption Expenses

Topics

Income and deductions

Code sections

§ 23, § 36C

Ruling dated

November 25, 2014

Publicly released

February 27, 2015

Source

View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2015, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.

About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.

View official IRS release (PDF)

Plain-English summary

Chief Counsel addressed an examination that disallowed an adoption tax credit because a non-Hague foreign adoption was not followed by a U.S. re-adoption. Revenue Procedure 2005-31 allows a taxpayer who completes a timely home-state re-adoption to choose between the foreign-decree year and the re-adoption year as the year of finality. It does not require a domestic re-adoption. Without one, the year of finality is the tax year in which the foreign country's competent authority issued the adoption decree.

Ruling snapshot

Question: Must a non-Hague foreign adoption be followed by a domestic re-adoption to qualify for the adoption tax credit?
Outcome: Advice given, re-adoption is not required
Key authorities: Rev. Proc. 2005-31

Full text (IRS public release)

ID: CCA-11251527-14
Office: ---------------
UILC: 23.01-03, 36C.00-00
Number: 201509037
Release Date: 2/27/2015
From: --------------------------
Sent: Tuesday, November 25, 2014 15:27 PM
To: -----------------
Cc: --------------------
Subject: Re-adoption not required under Rev. Proc. 2005-31

Good afternoon --

We understand that Exam is disallowing an adoption tax credit for a non-Hague adoption on the ground that the foreign-country adoption was not followed by a U.S. re- adoption. Exam should not disallow the credit on this ground.

Rev. Proc. 2005-31, 2005-1 C.B. 1374, provides that if a taxpayer adopts a child in a foreign-sending country and then re-adopts the child in the home state (the state of habitual residence) within one or two years thereafter, the taxpayer may choose to treat the year of finality as being either (1) the year the foreign decree was entered, or (2) the year of re-adoption, if the re-adoption occurs within the first or second year after the foreign adoption occurs.

Thus, Rev. Proc. 2005-31 allows the taxpayer to choose the year of finality if there is a re-adoption. However, Rev. Proc. 2005-31 does not require a re-adoption. In the absence of a re-adoption, the year of finality is the taxable year in which the foreign country’s competent authority issues the decree of adoption.

 Regards, --------------------------

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