Adoption tax credit

Yes, you can take the adoption credit for the year the expenses were
paid. So if all your expenses occurred in 2010 and the adoption is not finalized
until 2011, you still can claim the entire amount.

http://www.irs.gov/instructions/i8839/index.html

It depends on whether the adoption is domestic or foreign on when to tax the credit.


".04 Section 23(a)(2)(A) provides the general rule that, for QAE paid or incurred before the taxable year in which the adoption is final, the credit is allowed in the taxable year that follows the taxable year in which the QAE are paid or incurred. For QAE paid or incurred during or after the taxable year in which the adoption is final, the credit is allowed for the taxable year in which the QAE are paid or incurred. Sec. 23(a)(2)(B). For a foreign adoption, however, § 23(e) provides that (1) the credit is allowed only if the adoption becomes final, and (2) QAE paid or incurred in any taxable year before the taxable year in which the adoption becomes final are treated as paid or incurred in the taxable year in which the adoption becomes final. Rules similar to those under § 23(e) apply under § 137(e) for purposes of the exclusion for employer-provided adoption assistance."

http://www.irs.gov/irb/2005-26_IRB/ar14.html

More understandable imo:

"If the child is a US citizen or resident alien, then you take the adoption credit in the following order:

* for expenses paid before the adoption is final, you take the adoption credit in the year after your expenses were paid,

* for expenses paid in the same year that the adoption is final, you take the adoption credit in the same year, and

* for expenses paid in the year after the adoption is final, you take the adoption credit in the year the expenses were paid.

For example, you adopted a child in 2009, but you paid adoption expenses in 2008, 2009, and 2010. Your 2008 expenses are taken on your 2009 tax return (they must be delayed by one year because the adoption was not final). Your 2009 expenses are taken on your 2009 tax return (because they occurred in the same year as the adoption became final). You take your 2010 expenses on your 2010 tax return. In this example, your 2009 adoption expenses include costs incurred in both 2008 and 2009.

If the child is a foreign national, then you take the adoption credit only in the year when the adoption becomes final. Any expenses paid in the year after the adoption is finalized, you can take a credit for those expenses in the year that you paid them."

http://taxes.about.com/od/deductionscredits/qt/adoptioncredit.htm

A very simple answer is no you cannot take the credit on the 2010
return. You should consult your tax advisor.

I believe that it means the "finalized" adoption. Usally when the court awards you the custody of the child. Some times adoptions disrupt and don't finalize. Tax codes are usally very specific in this regard.