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@Hiker285 wrote:

as appreciation for his years of service.

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That is called a "bonus".  It is taxable to the employee (both income tax and FICA, and will be on the W-2) and the employer can deduct it as "wages" (and will pay any employer side of FICA).

I'm trying to wrap my head around this, but I'm wondering if it is ALSO a deemed sale by the employer.  So if the Basis of the property is $200,000 and the employer is claiming a $300,000 deduction as wages, it seems to me the employer would also report a deemed sale on 8949/Schedule D showing a profit of $100,000.

Does anybody have any thoughts about that?