
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-16 Section 202(a)(2)]
[Document affected by Public Law 107-16 Section 202(b)(1)(B)]
[Document affected by Public Law 107-16 Section 202(b)(2)(B)]
[Document affected by Public Law 107-16 Section 202(d)(2)]
[Document affected by Public Law 107-16 Section 202(e)(2)]
[Document affected by Public Law 107-16 Section 431(c)(1)]
[CITE: 26USC137]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
         PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
 
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 of the amounts paid or expenses incurred which may 
    be taken into account under subsection (a) for all taxable years 
    with respect to the adoption of a child by the taxpayer shall not 
    exceed $5,000 ($6,000, in the case of a child with special needs).

                        (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 adjusted 
        gross income exceeds $75,000, bears to
            (B) $40,000.

             (3) Determination of adjusted gross income

        For purposes of paragraph (2), adjusted gross income shall be 
    determined--
            (A) without regard to this section and sections 221, 911, 
        931, and 933, and
            (B) after the application of sections 86, 135, 219, and 469.

(c) Adoption assistance program

    For purposes of this section, an adoption assistance program is a 
separate written plan of an employer for the exclusive benefit of such 
employer's employees--
        (1) under which the employer provides such employees with 
    adoption assistance, and
        (2) which meets requirements similar to the requirements of 
    paragraphs (2), (3), (5), and (6) of section 127(b).

An adoption reimbursement program operated under section 1052 of title 
10, United States Code (relating to armed forces) or section 514 of 
title 14, United States Code (relating to members of the Coast Guard) 
shall be treated as an adoption assistance program for purposes of this 
section.

(d) Qualified adoption expenses

    For purposes of this section, the term ``qualified adoption 
expenses'' has the meaning given such term by section 23(d) (determined 
without regard to reimbursements under this section).

(e) Certain rules to apply

    Rules similar to the rules of subsections (e), (f), and (g) of 
section 23 shall apply for purposes of this section.

(f) Termination

    This section shall not apply to amounts paid or expenses incurred 
after December 31, 2001.

(Added Pub. L. 104-188, title I, Sec. 1807(b), Aug. 20, 1996, 110 Stat. 
1901; amended Pub. L. 105-34, title XVI, Sec. 1601(h)(2)(C), Aug. 5, 
1997, 111 Stat. 1092; Pub. L. 105-277, div. J, title IV, 
Sec. 4003(a)(2)(C), Oct. 21, 1998, 112 Stat. 2681-908.)


                            Prior Provisions

    A prior section 137 was renumbered section 139 of this title.


                               Amendments

    1998--Subsec. (b)(3)(A). Pub. L. 105-277 inserted ``221,'' after 
``and sections''.
    1997--Subsec. (b)(1). Pub. L. 105-34 substituted ``of the amounts 
paid or expenses incurred which may be taken into account'' for ``amount 
excludable from gross income''.


                    Effective Date of 1998 Amendment

    Amendment by Pub. L. 105-277 effective as if included in the 
provision of the Taxpayer Relief Act of 1997, Pub. L. 105-34, to which 
such amendment relates, see section 4003(l) of Pub. L. 105-277, set out 
as a note under section 86 of this title.


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-34 effective as if included in the 
provisions of the Small Business Job Protection Act of 1996, Pub. L. 
104-188, to which it relates, see section 1601(j) of Pub. L. 105-34, set 
out as a note under section 23 of this title.


                             Effective Date

    Section applicable to taxable years beginning after Dec. 31, 1996, 
see section 1807(e) of Pub. L. 104-188, set out as a note under section 
23 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 23, 86, 135, 219, 221, 414, 
469, 1016, 6039D of this title.
