Please help-a "special-needs" adoption by a RDP in California:
My friend's partner legally adopted the twins in 2011, and showed adoption credit (one "regular", one "special-needs") on her 2011 federal tax return. The IRS audited the return, found no other issues but allowed two REGULAR credits, and denied "special- needs" credit, stating that "a child meets "special-needs" definition if ALL of the following statements are true:
1. the child was a citizen of the US or its possessions at the time the adoption process began;
2. a state has determined that the child cannot or should not be returned to his or her PARENTS' HOME;
3. the state has determined that the child will not be adapted UNLESS ASSISTANCE is provided to the adoptive parents.
It appears that the rules don't provide for a possibility of an adoption of a special-needs child by the biological parent's RDP, while they do provide for a regular (healthy) child adoption.
Can we contest the IRS determination at all? Please share any advice you might have.
Tax Professional Answers
Meet Leading Tax Advisors
Federal Tax Credits & Incentives Practice Leader
New York, NY
Managing Tax Consultant
Des Plaines, IL
Rancho Santa Fe, CA
President/ Tax And Financial Advisor
Managing Tax Lawyer
Tax Advisor/Fiduciary Coach
San Diego, CA
Senior Tax Principal
Daytona Beach, FL
Managing Tax Advisor/CEO