The movie does leave it slightly ambiguous. There's enough in the film to suggest that the father molested the daughter and Alan had seen it, however it took care to not even get close to it. The whole film does this with sexuality in general. Notice that Alan has that woman come over twice, and twice there's a hint of sexuality, but nothing that couldn't be shown in a G-rated kids film. I don't think the film shows even one kiss (except from the first person perspective which is essentially just a girl slightly leaning towards a camera). Maybe it was intentional to be thematic with Alan's loveless life.
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