basemetal: I didn't RTFA


bless your heart

DarnoKonrad: basemetal: I didn't RTFA


bless your heart

Reading is hard.

basemetal: Now there's some change we can believe in.

Actually the only reason that this issue came up in the first place is because Citibank decided to try and write off the value of the frequent flier miles doled out during account openings on their own tax statements.

So if you're going to blame anyone for this, blame Citigroup.

I guess now every email being sent from groupon and living social can be consider income as well.

Want to see an auditor or tax accountant's head explode?

Enroll in this program as a corporate account.

Cndn Bacon: basemetal: Now there's some change we can believe in.

Actually the only reason that this issue came up in the first place is because Citibank decided to try and write off the value of the frequent flier miles doled out during account openings on their own tax statements.

So if you're going to blame anyone for this, blame Citigroup.

Yah, but it's still Obama's fault. Because socialism.

This is only problematic because you have to declare the miles at the grossly overvalued rate that airlines charge for their purchase. A friend of mine won 50,000 Mileageplus points from United, which you might be able to redeem for one roundtrip domestic trip, which you could purchase for, say, $400. The monetary value assigned by United to those miles is $1,250. Assuming a 30% tax rate, she is on the hook for more than what the miles can get her. It's terrible.

The government is good.

The government is your friend.

Love your government, because your government loves you.

But you better give him his money or something bad might happen.

US Navy:

If it moves, grease it.
If it doesn't move, paint it.

US government:

If it moves, tax it.
If it doesn't move, tax it.

InfrasonicTom: I guess now every email being sent from groupon and living social can be consider income as well.

Gotta make the serf class happen somehow. It is taking too long!

GORDON: The government is good.

The government is your friend.

Love your government, because your government loves you.

But you better give him his money or something bad might happen.

Your blog really sucks.

By the way, here's a much better rundown of the issues:

The Points Guy Blog. (new window)

A lot of stuff is still kind of murky, like how much they could/do value points at, plus how the IRS pretty much did an about-face in terms of its policy but we'll have to wait and see how all this actually turns out.

Old news is old. Link (new window)

Broaden the Base, right? Seriously, anything that helps put airlines out of business is good news to me. I HATE flying, I don't even want it to be an option.

$0.025 is kinda high for the way most folk use AA miles: either for domestic coach tickets or upgrades. In the latter case, you have to have paid an upgradeable fare which is often just as expensive as the discounted fare for the next class up. The value in those cases are as little as a penny.

On the other hand, if you use them the way I do... to get international business or first class seats, the leverage is much better. Mr. Sinanju and I flew in AA first from the US east coast to Beijing and back from Shanghai. Those tickets priced right now go for $14k each. Alternatively, you can get them for 100k miles each, giving you a value of $0.14/mile. I still have one million miles in my AA account. There ain't no way I'm paying taxes on my next million as if it were $140k in income.

sinanju: $0.025 is kinda high for the way most folk use AA miles: either for domestic coach tickets or upgrades. In the latter case, you have to have paid an upgradeable fare which is often just as expensive as the discounted fare for the next class up. The value in those cases are as little as a penny.

On the other hand, if you use them the way I do... to get international business or first class seats, the leverage is much better. Mr. Sinanju and I flew in AA first from the US east coast to Beijing and back from Shanghai. Those tickets priced right now go for $14k each. Alternatively, you can get them for 100k miles each, giving you a value of $0.14/mile. I still have one million miles in my AA account. There ain't no way I'm paying taxes on my next million as if it were $140k in income.

Couple of mistakes. First... it's Mrs. Sinanju. Not sure where the S went.

Also, that's 135k miles for the ticket with a value of $0.104/mile. My argument stands.

[doubleTaxation.jpg]

Not really asinine. Chase is sending 1099s to anyone who opened a checking account and got the $150 or $200 (or however much they were offering as a bribe). And that's exactly what they should be doing. The trick with what Citibank is doing with FF miles is the reported valuation. I have no idea if $0.025/mile is reasonable or not.

You can get into trick situation with normal FF miles, also. If, for example, the value of the FF miles you receive when purchasing a ticket somehow exceeds the value of the ticket itself, that excess would most likely qualify as taxable income.

basemetal: Now there's some change we can believe in.

I see no change. I've been 1099ed for rewards for opening an account. It's always been cash but what form the reward takes wouldn't matter.

bv2112: This is only problematic because you have to declare the miles at the grossly overvalued rate that airlines charge for their purchase. A friend of mine won 50,000 Mileageplus points from United, which you might be able to redeem for one roundtrip domestic trip, which you could purchase for, say, $400. The monetary value assigned by United to those miles is $1,250. Assuming a 30% tax rate, she is on the hook for more than what the miles can get her. It's terrible.

1) If it's truly overvalued you can indicate an adjustment on your tax form. I don't recall the details of how to do this.

2) 50,000 miles on United is only worth $400?? I've got tickets in hand on United that we paid 65,000 miles/seat for that would be over $900.

arcas: I have no idea if $0.025/mile is reasonable or not.

Considering you can buy miles at AA.com for $0.02 each right now, Citi's valuation is significantly high.

genner: [punditkitchen.files.wordpress.com image 500x280]

Heh. Haven't heard of any followup interviews or articles on those guys since the week immediately afterwards. Curious how they are now.

I'll agree that FF miles might be taxable, but ONLY if it is reasonably possible to redeem them.

As it stands now, they're practically worthless.

Doesn't this fall under the gift card rules? They have to send you the benefits in cash, and they never expire?