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Www Irs Gov 2011freeefile

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Www Irs Gov 2011freeefile

Www irs gov 2011freeefile Index A Adopted child, Adopted child. Www irs gov 2011freeefile Adoption taxpayer identification number (ATIN), Married child. Www irs gov 2011freeefile Age test (see Qualifying child) Alaska Permanent Fund dividends, Rule 6—Your Investment Income Must Be $3,300 or Less Alimony, Income That Is Not Earned Income Annuities, Income That Is Not Earned Income Armed forces, Nontaxable military pay. Www irs gov 2011freeefile , Military personnel stationed outside the United States. Www irs gov 2011freeefile , Temporary absences. Www irs gov 2011freeefile , Joint Return Test, Military personnel stationed outside the United States. Www irs gov 2011freeefile , Nontaxable combat pay. Www irs gov 2011freeefile Assistance (see Tax help) B Basic Allowance for Housing (BAH), Nontaxable military pay. Www irs gov 2011freeefile Basic Allowance for Subsistence (BAS), Nontaxable military pay. Www irs gov 2011freeefile C Child Adopted child, Adopted child. 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Www irs gov 2011freeefile Domestic partner, Nevada, Washington, and California domestic partners. Www irs gov 2011freeefile E Earned income, Rule 7—You Must Have Earned Income, Earned Income Earned income credit (EIC), EIC Table EITC Assistant, Is There Help Online? Extended active duty, Extended active duty. Www irs gov 2011freeefile , Military personnel stationed outside the United States. Www irs gov 2011freeefile F Figuring EIC yourself, Chapter 4—Figuring and Claiming the EIC, How To Figure the EIC Yourself Filing status: Head of household, Rule 3—Your Filing Status Cannot Be Married Filing Separately Married filing separately, Rule 3—Your Filing Status Cannot Be Married Filing Separately Forms: 1040, Do I Need This Publication?, Adjusted gross income (AGI). Www irs gov 2011freeefile , No SSN. Www irs gov 2011freeefile , Form 1040. Www irs gov 2011freeefile 1040A, Adjusted gross income (AGI). Www irs gov 2011freeefile , No SSN. Www irs gov 2011freeefile , Form 1040A. 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Www irs gov 2011freeefile , Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer, Fraud, Exception 2. Www irs gov 2011freeefile , Are You Prohibited From Claiming the EIC for a Period of Years? Free tax services, Free help with your tax return. Www irs gov 2011freeefile H Head of household, Community property. Www irs gov 2011freeefile , Spouse did not live with you. Www irs gov 2011freeefile , Community property. Www irs gov 2011freeefile , Rule 9—Your Qualifying Child Cannot Be Used by More Than One Person To Claim the EIC, Applying Rule 9 to divorced or separated parents (or parents who live apart). Www irs gov 2011freeefile Help (see Tax help) Home Homeless shelter, Rule 14—You Must Have Lived in the United States More Than Half of the Year Military, Rule 14—You Must Have Lived in the United States More Than Half of the Year United States, Rule 14—You Must Have Lived in the United States More Than Half of the Year Homeless, Homeless shelter. Www irs gov 2011freeefile , Homeless shelter. Www irs gov 2011freeefile I Income that is not earned income, Income That Is Not Earned Income Individual taxpayer identification number (ITIN), Other taxpayer identification number. Www irs gov 2011freeefile , Married child. Www irs gov 2011freeefile Inmate, Earnings while an inmate. Www irs gov 2011freeefile , Figuring earned income. Www irs gov 2011freeefile Interest, Income That Is Not Earned Income Investment income, Rule 6—Your Investment Income Must Be $3,300 or Less IRS can figure EIC for you, IRS Will Figure the EIC for You J Joint return test (see Qualifying child) K Kidnapped child, Kidnapped child. Www irs gov 2011freeefile M Married child, Married child. Www irs gov 2011freeefile Married filing a joint return, Rule 4—You Must Be a U. Www irs gov 2011freeefile S. Www irs gov 2011freeefile Citizen or Resident Alien All Year Married filing separately, Spouse did not live with you. Www irs gov 2011freeefile Military Combat pay, Nontaxable military pay. Www irs gov 2011freeefile Nontaxable pay, Nontaxable military pay. Www irs gov 2011freeefile Outside U. Www irs gov 2011freeefile S. Www irs gov 2011freeefile , Military personnel stationed outside the United States. Www irs gov 2011freeefile Minister, Net earnings from self-employment. Www irs gov 2011freeefile , Minister's housing. Www irs gov 2011freeefile , Church employees. Www irs gov 2011freeefile N Net earnings, self-employment, Net earnings from self-employment. Www irs gov 2011freeefile Nonresident alien, Rule 4—You Must Be a U. Www irs gov 2011freeefile S. Www irs gov 2011freeefile Citizen or Resident Alien All Year, Step 1. Www irs gov 2011freeefile O Online help EITC Assistant, Is There Help Online? P Parents, divorced or separated, Married child. Www irs gov 2011freeefile , Examples. Www irs gov 2011freeefile , Special rule for divorced or separated parents (or parents who live apart). Www irs gov 2011freeefile Passive activity, Worksheet 1. Www irs gov 2011freeefile Investment Income If You Are Filing Form 1040 Pensions, Income That Is Not Earned Income Permanently and totally disabled, Permanently and totally disabled. Www irs gov 2011freeefile Prisoner, Figuring earned income. Www irs gov 2011freeefile Publications (see Tax help) Q Qualifying child, Can I Claim the EIC?, Do I Have To Have A Child To Qualify For The EIC?, Chapter 2—Rules If You Have a Qualifying Child Age test, Rule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests, Age Test Home, Residency Test Joint return test, Rule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Permanently and totally disabled, Permanently and totally disabled. Www irs gov 2011freeefile Relationship test, Rule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Residency test, Residency Test United States, Residency Test R Railroad retirement benefits, Income That Is Not Earned Income Registered domestic partner, Nevada, Washington, and California domestic partners. Www irs gov 2011freeefile Relationship test (see Qualifying child) Reminders, Reminders Residency test (see Qualifying child) S Salaries, wages, and tips, Earned Income, Wages, salaries, and tips. Www irs gov 2011freeefile , Earned Income Schedules: C, EIC Worksheet A. Www irs gov 2011freeefile , EIC Worksheet B. Www irs gov 2011freeefile C-EZ, EIC Worksheet A. Www irs gov 2011freeefile , EIC Worksheet B. Www irs gov 2011freeefile EIC, Chapter 2—Rules If You Have a Qualifying Child, Kidnapped child. Www irs gov 2011freeefile , Figuring earned income. Www irs gov 2011freeefile , Nontaxable combat pay. Www irs gov 2011freeefile , How To Figure the EIC Yourself, When to use the optional methods of figuring net earnings. Www irs gov 2011freeefile , Schedule EIC SE, Figuring earned income. Www irs gov 2011freeefile , Clergy. Www irs gov 2011freeefile , Church employees. Www irs gov 2011freeefile , EIC Worksheet A. Www irs gov 2011freeefile , EIC Worksheet B. Www irs gov 2011freeefile , Net earnings from self-employment $400 or more. Www irs gov 2011freeefile , When to use the optional methods of figuring net earnings. Www irs gov 2011freeefile , When both spouses have self-employment income. Www irs gov 2011freeefile School, School defined. Www irs gov 2011freeefile Self-employed persons, Rule 7—You Must Have Earned Income, Figuring earned income. Www irs gov 2011freeefile , EIC Worksheet B. Www irs gov 2011freeefile Self-employment income, Earned Income Self-employment tax, Net earnings from self-employment $400 or more. Www irs gov 2011freeefile Separated parents, special rule, Married child. Www irs gov 2011freeefile Social security benefits, Income That Is Not Earned Income Social security number (SSN), Rule 2—You Must Have a Valid Social Security Number (SSN), Valid for work only with INS authorization or DHS authorization. Www irs gov 2011freeefile , No SSN. Www irs gov 2011freeefile , Getting an SSN. Www irs gov 2011freeefile , Married child. Www irs gov 2011freeefile , Exception for math or clerical errors. Www irs gov 2011freeefile Statutory employee, Statutory employee. Www irs gov 2011freeefile , Figuring earned income. Www irs gov 2011freeefile , EIC Worksheet A. Www irs gov 2011freeefile , Statutory employees. Www irs gov 2011freeefile Strike benefits, Strike benefits. Www irs gov 2011freeefile Student, Student defined. Www irs gov 2011freeefile T Tax help, How To Get Tax Help Taxpayer identification number Adoption identification number (ATIN), Married child. Www irs gov 2011freeefile Individual taxpayer identification number (ITIN), Other taxpayer identification number. Www irs gov 2011freeefile Social security number (SSN), Other taxpayer identification number. Www irs gov 2011freeefile Tiebreaker rules, Tiebreaker rules. Www irs gov 2011freeefile Tips, wages, and salaries, Earned Income, Wages, salaries, and tips. Www irs gov 2011freeefile , Earned Income TTY/TDD information, How To Get Tax Help U Unemployment compensation, Income That Is Not Earned Income United States, United States. Www irs gov 2011freeefile V Veterans' benefits, Income That Is Not Earned Income W Wages, salaries, and tips, Earned Income, Wages, salaries, and tips. Www irs gov 2011freeefile , Earned Income Welfare benefits, Income That Is Not Earned Income Workers' compensation benefits, Income That Is Not Earned Income Workfare payments, Workfare payments. Www irs gov 2011freeefile Worksheet 1, Worksheet 1. Www irs gov 2011freeefile Investment Income If You Are Filing Form 1040 Worksheet 2, Worksheet 2. Www irs gov 2011freeefile Worksheet for Line 4 of Worksheet 1 Prev  Up     Home   More Online Publications
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The Www Irs Gov 2011freeefile

Www irs gov 2011freeefile 2. Www irs gov 2011freeefile   Employees' Pay Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tests for Deducting PayTest 1—Reasonableness Test 2—For Services Performed Kinds of PayAwards Bonuses Education Expenses Fringe Benefits Loans or Advances Property Reimbursements for Business Expenses Sick and Vacation Pay Introduction You can generally deduct the amount you pay your employees for the services they perform. Www irs gov 2011freeefile The pay may be in cash, property, or services. Www irs gov 2011freeefile It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. Www irs gov 2011freeefile For information about deducting employment taxes, see chapter 5. Www irs gov 2011freeefile You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. Www irs gov 2011freeefile Empowerment zone employment credit (Form 8844). Www irs gov 2011freeefile Indian employment credit (Form 8845). Www irs gov 2011freeefile Work opportunity credit (Form 5884). Www irs gov 2011freeefile Credit for employer differential wage payments (Form 8932). Www irs gov 2011freeefile Reduce your deduction for employee wages by the amount of employment credits you claim. Www irs gov 2011freeefile For more information about these credits, see the form on which the credit is claimed. Www irs gov 2011freeefile Topics - This chapter discusses: Tests for deducting pay Kinds of pay Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits See chapter 12 for information about getting publications and forms. Www irs gov 2011freeefile Tests for Deducting Pay To be deductible, your employees' pay must be an ordinary and necessary business expense and you must pay or incur it. Www irs gov 2011freeefile These and other requirements that apply to all business expenses are explained in chapter 1. Www irs gov 2011freeefile In addition, the pay must meet both of the following tests. Www irs gov 2011freeefile Test 1. Www irs gov 2011freeefile It must be reasonable. Www irs gov 2011freeefile Test 2. Www irs gov 2011freeefile It must be for services performed. Www irs gov 2011freeefile The form or method of figuring the pay does not affect its deductibility. Www irs gov 2011freeefile For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. Www irs gov 2011freeefile Test 1—Reasonableness You must be able to prove that the pay is reasonable. Www irs gov 2011freeefile Whether the pay is reasonable depends on the circumstances that existed when you contracted for the services, not those that exist when reasonableness is questioned. Www irs gov 2011freeefile If the pay is excessive, the excess pay is disallowed as a deduction. Www irs gov 2011freeefile Factors to consider. Www irs gov 2011freeefile   Determine the reasonableness of pay by the facts and circumstances. Www irs gov 2011freeefile Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. Www irs gov 2011freeefile   To determine if pay is reasonable, also consider the following items and any other pertinent facts. Www irs gov 2011freeefile The duties performed by the employee. Www irs gov 2011freeefile The volume of business handled. Www irs gov 2011freeefile The character and amount of responsibility. Www irs gov 2011freeefile The complexities of your business. Www irs gov 2011freeefile The amount of time required. Www irs gov 2011freeefile The cost of living in the locality. Www irs gov 2011freeefile The ability and achievements of the individual employee performing the service. Www irs gov 2011freeefile The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation. Www irs gov 2011freeefile Your policy regarding pay for all your employees. Www irs gov 2011freeefile The history of pay for each employee. Www irs gov 2011freeefile Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. Www irs gov 2011freeefile Employee-shareholder salaries. Www irs gov 2011freeefile   If a corporation pays an employee who is also a shareholder a salary that is unreasonably high considering the services actually performed, the excessive part of the salary may be treated as a constructive dividend to the employee-shareholder. Www irs gov 2011freeefile The excessive part of the salary would not be allowed as a salary deduction by the corporation. Www irs gov 2011freeefile For more information on corporate distributions to shareholders, see Publication 542, Corporations. Www irs gov 2011freeefile Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. Www irs gov 2011freeefile For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. Www irs gov 2011freeefile Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. Www irs gov 2011freeefile If you give property to an employee as an employee achievement award, your deduction may be limited. Www irs gov 2011freeefile Achievement awards. Www irs gov 2011freeefile   An achievement award is an item of tangible personal property that meets all the following requirements. Www irs gov 2011freeefile It is given to an employee for length of service or safety achievement. Www irs gov 2011freeefile It is awarded as part of a meaningful presentation. Www irs gov 2011freeefile It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. Www irs gov 2011freeefile Length-of-service award. Www irs gov 2011freeefile    An award will qualify as a length-of-service award only if either of the following applies. Www irs gov 2011freeefile The employee receives the award after his or her first 5 years of employment. Www irs gov 2011freeefile The employee did not receive another length-of-service award (other than one of very small value) during the same year or in any of the prior 4 years. Www irs gov 2011freeefile Safety achievement award. Www irs gov 2011freeefile    An award for safety achievement will qualify as an achievement award unless one of the following applies. Www irs gov 2011freeefile It is given to a manager, administrator, clerical employee, or other professional employee. Www irs gov 2011freeefile During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value). Www irs gov 2011freeefile Deduction limit. Www irs gov 2011freeefile   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. Www irs gov 2011freeefile $400 for awards that are not qualified plan awards. Www irs gov 2011freeefile $1,600 for all awards, whether or not qualified plan awards. Www irs gov 2011freeefile   A qualified plan award is an achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits. Www irs gov 2011freeefile   A highly compensated employee is an employee who meets either of the following tests. Www irs gov 2011freeefile The employee was a 5% owner at any time during the year or the preceding year. Www irs gov 2011freeefile The employee received more than $115,000 in pay for the preceding year. Www irs gov 2011freeefile You can choose to ignore test (2) if the employee was not also in the top 20% of employees ranked by pay for the preceding year. Www irs gov 2011freeefile   An award is not a qualified plan award if the average cost of all the employee achievement awards given during the tax year (that would be qualified plan awards except for this limit) is more than $400. Www irs gov 2011freeefile To figure this average cost, ignore awards of nominal value. Www irs gov 2011freeefile Deduct achievement awards as a nonwage business expense on your return or business schedule. Www irs gov 2011freeefile You may not owe employment taxes on the value of some achievement awards you provide to an employee. Www irs gov 2011freeefile See Publication 15-B. Www irs gov 2011freeefile Bonuses You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services, not as a gift, and the services were performed. Www irs gov 2011freeefile However, the total bonuses, salaries, and other pay must be reasonable for the services performed. Www irs gov 2011freeefile If the bonus is paid in property, see Property , later. Www irs gov 2011freeefile Gifts of nominal value. Www irs gov 2011freeefile    If, to promote employee goodwill, you distribute food or merchandise of nominal value to your employees at holidays, you can deduct the cost of these items as a nonwage business expense. Www irs gov 2011freeefile Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. Www irs gov 2011freeefile For more information on this deduction limit, see Meals and lodging , later. Www irs gov 2011freeefile Education Expenses If you pay or reimburse education expenses for an employee, you can deduct the payments if they are part of a qualified educational assistance program. Www irs gov 2011freeefile Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. Www irs gov 2011freeefile For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. Www irs gov 2011freeefile Fringe Benefits A fringe benefit is a form of pay for the performance of services. Www irs gov 2011freeefile You can generally deduct the cost of fringe benefits. Www irs gov 2011freeefile You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. Www irs gov 2011freeefile You also may not owe employment taxes on the value of the fringe benefits. Www irs gov 2011freeefile See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. Www irs gov 2011freeefile Your deduction for the cost of fringe benefits for activities generally considered entertainment, amusement, or recreation, or for a facility used in connection with such an activity (for example, a company aircraft) for certain officers, directors, and more-than-10% shareholders is limited. Www irs gov 2011freeefile Certain fringe benefits are discussed next. Www irs gov 2011freeefile See Publication 15-B for more details on these and other fringe benefits. Www irs gov 2011freeefile Meals and lodging. Www irs gov 2011freeefile   You can usually deduct the cost of furnishing meals and lodging to your employees. Www irs gov 2011freeefile Deduct the cost in whatever category the expense falls. Www irs gov 2011freeefile For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. Www irs gov 2011freeefile If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. Www irs gov 2011freeefile Deduction limit on meals. Www irs gov 2011freeefile   You can generally deduct only 50% of the cost of furnishing meals to your employees. Www irs gov 2011freeefile However, you can deduct the full cost of the following meals. Www irs gov 2011freeefile Meals whose value you include in an employee's wages. Www irs gov 2011freeefile Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. Www irs gov 2011freeefile This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. Www irs gov 2011freeefile Meals you furnish to your employees at the work site when you operate a restaurant or catering service. Www irs gov 2011freeefile Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. Www irs gov 2011freeefile Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). Www irs gov 2011freeefile This does not include meals you furnish on vessels primarily providing luxury water transportation. Www irs gov 2011freeefile Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. Www irs gov 2011freeefile This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. Www irs gov 2011freeefile Employee benefit programs. Www irs gov 2011freeefile   Employee benefit programs include the following. Www irs gov 2011freeefile Accident and health plans. Www irs gov 2011freeefile Adoption assistance. Www irs gov 2011freeefile Cafeteria plans. Www irs gov 2011freeefile Dependent care assistance. Www irs gov 2011freeefile Education assistance. Www irs gov 2011freeefile Life insurance coverage. Www irs gov 2011freeefile Welfare benefit funds. Www irs gov 2011freeefile   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. Www irs gov 2011freeefile For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc. Www irs gov 2011freeefile ). Www irs gov 2011freeefile Life insurance coverage. Www irs gov 2011freeefile   You cannot deduct the cost of life insurance coverage for you, an employee, or any person with a financial interest in your business, if you are directly or indirectly the beneficiary of the policy. Www irs gov 2011freeefile See Regulations section 1. Www irs gov 2011freeefile 264-1 for more information. Www irs gov 2011freeefile Welfare benefit funds. Www irs gov 2011freeefile   A welfare benefit fund is a funded plan (or a funded arrangement having the effect of a plan) that provides welfare benefits to your employees, independent contractors, or their beneficiaries. Www irs gov 2011freeefile Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. Www irs gov 2011freeefile   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. Www irs gov 2011freeefile If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. Www irs gov 2011freeefile   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. Www irs gov 2011freeefile The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. Www irs gov 2011freeefile The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. Www irs gov 2011freeefile These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. Www irs gov 2011freeefile   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. Www irs gov 2011freeefile Loans or Advances You generally can deduct as wages an advance you make to an employee for services performed if you do not expect the employee to repay the advance. Www irs gov 2011freeefile However, if the employee performs no services, treat the amount you advanced as a loan. Www irs gov 2011freeefile If the employee does not repay the loan, treat it as income to the employee. Www irs gov 2011freeefile Below-market interest rate loans. Www irs gov 2011freeefile   On certain loans you make to an employee or shareholder, you are treated as having received interest income and as having paid compensation or dividends equal to that interest. Www irs gov 2011freeefile See Below-Market Loans in chapter 4. Www irs gov 2011freeefile Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. Www irs gov 2011freeefile The amount you can deduct is the property's fair market value on the date of the transfer less any amount the employee paid for the property. Www irs gov 2011freeefile You can claim the deduction only for the tax year in which your employee includes the property's value in income. Www irs gov 2011freeefile Your employee is deemed to have included the value in income if you report it on Form W-2, Wage and Tax Statement, in a timely manner. Www irs gov 2011freeefile You treat the deductible amount as received in exchange for the property, and you must recognize any gain or loss realized on the transfer, unless it is the company's stock transferred as payment for services. Www irs gov 2011freeefile Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. Www irs gov 2011freeefile These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. Www irs gov 2011freeefile Restricted property. Www irs gov 2011freeefile   If the property you transfer for services is subject to restrictions that affect its value, you generally cannot deduct it and do not report gain or loss until it is substantially vested in the recipient. Www irs gov 2011freeefile However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. Www irs gov 2011freeefile    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. Www irs gov 2011freeefile This means that the recipient is not likely to have to give up his or her rights in the property in the future. Www irs gov 2011freeefile Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. Www irs gov 2011freeefile However, your deduction may be limited. Www irs gov 2011freeefile If you make the payment under an accountable plan, deduct it in the category of the expense paid. Www irs gov 2011freeefile For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. Www irs gov 2011freeefile If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. Www irs gov 2011freeefile See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. Www irs gov 2011freeefile Sick and Vacation Pay Sick pay. Www irs gov 2011freeefile   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. Www irs gov 2011freeefile However, your deduction is limited to amounts not compensated by insurance or other means. Www irs gov 2011freeefile Vacation pay. Www irs gov 2011freeefile   Vacation pay is an employee benefit. Www irs gov 2011freeefile It includes amounts paid for unused vacation leave. Www irs gov 2011freeefile You can deduct vacation pay only in the tax year in which the employee actually receives it. Www irs gov 2011freeefile This rule applies regardless of whether you use the cash or accrual method of accounting. 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