Wednesday, August 27, 2014
Tax Court Approves the IRS's Taxation of Frequent Flyer Miles
The Tax Court yesterday required the taxpayer to include $668 in income as reported by Citibank on Form 1099-MISC as the value of an airline ticket received by the taxpayer upon redemption of 50,000 "Thank You Points" from opening a Citibank account. Shankar v. Commissioner, 143 T.C. No. 5 (Aug. 26, 2014).
- The Tax Treatment of Frequent Flyer Miles: An Update (July 7, 2008)
- Why Does Citibank, But Not the IRS, Treat Frequent Flyer Miles as Taxable Income? (Jan. 24, 2012)
- IRS Clarifies Tax Treatment of Frequent Flier Miles (Jan. 31, 2012)
- Maule: The Frequent Flyer Tax Flap (Feb. 3, 2012)
- WSJ: The Tax Treatment of Frequent Flier Miles (Feb. 5, 2012)
- IRS Eyes New Ways to Tax Frequent Flyer Miles (May 30, 2014)
(Hat Tip: Phil Hackney.)
Update: Sam Brunson (Loyola-Chicago), Tax Court: Frequent Flier Miles Are Income
I think that it would be helpful if your post clarified that the Tax Court made the assumption that the Thank You points were awarded as interest on a deposit account, not a credit card.
"We proceed on the assumption that we are dealing here with a premium
for making a deposit into, or maintaining a balance in, a bank account. In other
words, something given in exchange for the use (deposit) of Mr. Shankar's money;
i.e., something in the nature of interest."
Posted by: Frequent Traveler | Aug 28, 2014 3:51:48 AM