Posted 11/9/11

IRS RULES THAT EMPLOYER LIABILITY FOR MINIMUM REQUIRED BONUSES IS FIXED EVEN IF RECIPIENTS UNKNOWN

In Rev. Rul. 2011-29, the IRS has ruled that an employer who is required to pay a minimum amount of bonuses to eligible employees each year meets the "fact of liability" test for accruing a deduction for the bonuses. Revoking an earlier ruling to the contrary, the IRS held that the employer's liability is fixed even though the employer does not know the identity of the particular bonus recipients until after the end of the taxable year.

Download the full text of the ruling below.

REV. RUL. 2011-29