The employment credit, with respect to all 
qualified employees, is equal to the sum of the 
employment credits for each qualified employee 
under this subsection. 
‘‘(B) AVERAGE
DAILY
QUALIFIED
COM-
PENSATION AND AVERAGE DAILY MILITARY PAY 
AND ALLOWANCES.—As used with respect to a 
qualified employee— 
‘‘(i) the term ‘average daily qualified 
compensation’ means the qualified com-
pensation of the qualified employee for the 
taxable year divided by the difference be-
tween— 
‘‘(I) 365, and 
‘‘(II) the number of days the 
qualified 
employee 
participates 
in 
qualified reserve component duty dur-
ing the taxable year, including time 
spent in a travel status, and 
‘‘(ii) the term ‘average daily military 
pay and allowances’ means— 
‘‘(I) the amount paid to the 
qualified employee during the taxable 
year as military pay and allowances 
on account of the qualified employee’s
participation in qualified reserve com-
ponent duty, divided by 
‘‘(II) the total number of days 
the qualified employee participates in 
qualified reserve component duty, in-
cluding time spent in travel status. 
‘‘(C) QUALIFIED
COMPENSATION.—When 
used with respect to the compensation paid or 
that would have been paid to a qualified em-
ployee for any period during which the qualified 
employee participates in qualified reserve com-
ponent duty, the term ‘qualified compensation’ 
means— 
‘‘(i) compensation which is normally 
contingent on the qualified employee’s 
presence for work and which would be de-
ductible from the taxpayer’s gross income 
under section 162(a)(1) if the qualified 
employee were present and receiving such 
compensation, 
‘‘(ii) compensation which is not char-
acterized by the taxpayer as vacation or 
holiday pay, or as sick leave or pay, or as 
any other form of pay for a nonspecific 
leave of absence, and with respect to which
the number of days the qualified employee 
participates in qualified reserve component 
duty does not result in any reduction in 
the amount of vacation time, sick leave, or 
other nonspecific leave previously credited 
to or earned by the qualified employee, and 
‘‘(iii) group health plan costs (if any) 
with respect to the qualified employee. 
‘‘(D) QUALIFIED
EMPLOYEE.—The term 
‘qualified employee’ means a person who— 
‘‘(i) has been an employee of the tax-
payer for the 91-day period immediately 
preceding the period during which the em-
ployee participates in qualified reserve 
component duty, and 
‘‘(ii) is a member of the Ready Re-
serve of a reserve component of an Armed 
Force of the United States as defined in 
sections 10142 and 10101 of title 10, 
United States Code. 
‘‘(2) QUALIFIED REPLACEMENT EMPLOYEES.— 
‘‘(A) IN GENERAL.—The employment cred-
it with respect to a qualified replacement em-
ployee of the taxpayer for any taxable year is 
equal to the lesser of—
‘‘(i) the individual’s qualified com-
pensation attributable to service rendered 
as a qualified replacement employee, or 
‘‘(ii) $15,000. 
The employment credit, with respect to all 
qualified replacement employees, is equal to the 
sum of the employment credits for each quali-
fied replacement employee under this sub-
section. 
‘‘(B) QUALIFIED
COMPENSATION.—When 
used with respect to the compensation paid to 
a qualified replacement employee, the term 
‘qualified compensation’ means— 
‘‘(i) compensation which is normally 
contingent on the qualified replacement 
employee’s presence for work and which is 
deductible from the taxpayer’s gross in-
come under section 162(a)(1), 
‘‘(ii) compensation which is not char-
acterized by the taxpayer as vacation or 
holiday pay, or as sick leave or pay, or as 
any other form of pay for a nonspecific 
leave of absence, and