What is the ruling on using extracts (ex. vanilla extract), for baking and cooking? As most are made with alcohol.

The legal ruling for this issue and its like is based on two matters; Istihlak (consumption) and Istihala (conversion) and likewise their effect on removing a substance's impurity [najasa] and on rendering it permissible for human consumption.

Meaning of Istihala:

Istihala means the transformation of a substance's properties resulting in the removal of its impure nature. Scholars have unanimously agreed that alcohol is deemed pure if it transforms into vinegar.

The majority of Hanafi and Maliki scholars as well as in an opinion stated by Imam Ahmed, they maintained that any impure substance can be deemed pure if it has undergone Istihala (apart from wine turning into vinegar). This is because the impure nature of such a substance is transformed and completely changed. Since Islamic law bases the description of impurity on the presence of certain properties, its description as impure no longer applies due to transformation in its essence. This opinion is based on the case of the purity of alcohol which transforms into vinegar, the purity of deer's blood transforming into musk and the purity of a blood clot after transforming into a piece of flesh [during gestation]. This is the opinion implemented for fatwa.

As for Istihlak (consumption), it means that the percentage of alcohol in a certain substance is so negligible that it does not lead to intoxication, even if a person drinks large amounts of it. A beverage is deemed prohibited for human consumption if the percentage of alcohol in it leads to intoxication whether or not it is drunk in little amounts. This is in correspondence to the hadith narrated by Jabir (may Allah be pleased with him) that the Prophet (pbuh) said, "Any beverage that intoxicates when taken in large quantities is unlawful both in small and large quantities." [Recorded by Abu Dawud and al-Nisa'i. Ibn Hibban declared it authentic from a hadith of Jabir (may Allah be pleased with him)]. The meaning of this is that any drink that intoxicates is forbidden in small amounts because drinking small amounts that do not intoxicate may lead to drinking large amounts that do. However, it is lawful to drink beverages that have been mixed with minute quantities of an intoxicating substance, and does not lead to intoxication even if drunk in large amounts. This does not come under this noble hadith and its like.

The above mentioned [impermissibility] applies if we consider alcohol impure. However, Sheikh Mohammed Bekheit al-Miti'i, the grand Hanafi imam and former mufti of Egypt, verified the matter and issued a fatwa stating that chemical alcohol is not considered wine in the first place. Accordingly, it is pure unless it is derived from wine.

Najasa (impurity) is a legal issue and not a chemical fact in the sense that the impurity of khamr (wine) is determined by the shari'ah. It is a chemical fact that alcohol is the intoxicating element in alcoholic drinks. However, this chemical fact does not necessarily render alcohol impure or prohibited if it is found in any liquid other than khamr. This is because the impurity of a compound does not necessitate the impurity of its elements. The impurities upon which there is consensus such as human urine and stool consist of chemical elements which can be found not only in pure entities but also in food and drink. However, the najasa and filth of these substances are caused by the composition of certain constituents in a certain percentage.
Fermentation is caused by the presence of sugars without which the process of fermentation is impossible however long the [food or drink] is left to ferment, such as colocynth.

Fermentation is the conversion of sugar into alcohol and carbonic acid. Thus, the fermented liquid becomes an intoxicant due to the presence of alcohol. Pure alcohol is not an intoxicant, but it is harmful to health. Drinking pure alcohol causes either slumber or brain damage.

To convert alcohol into khamr, it must be mixed with 3 times its amount of water, then distilled at which time it is converted into an intoxicant. The addition of water gives khamr intoxicating properties. The reason behind the variety of intoxicants depends on the differences in the intoxicating effect resulting from the ratio of water and alcohol. Arrack contains 40% alcohol or more. Other kinds of alcoholic drinks contain 10% alcohol. Fiqa', derived from barley, contains 5% alcohol and so forth. Pure alcohol is a poisonous substance and does not become intoxicating unless it is mixed with water.