Friday, February 3, 2012
Is a taxpayer required to include in gross income the value of frequent flyer miles received from a bank for opening an account? The story triggering the question broke last week. Citibank, which transfers frequent flyer miles to customers who open an account with the bank, issued Forms 1099 to its customers, reporting the value of the miles – that is another issue – as miscellaneous income. The practical effect is that failure by the customer to report the income will cause the IRS computers to make an adjustment because there is no entry on the customer’s income tax return matching the Form 1099. ... [M]ust the frequent flyer miles received from Citibank for opening accounts be included in gross income?