Stuart O. Bronstein wrote:
- quote -

That's a different situation. Above, the employer isn't
making the contribution - the employee is. I treated your
first situation as a case where the employee directed the
employer to pay his salary DIRECTLY to the charity. In that
situation, the employee doesn't have income nor a deduction,
and the employer doesn't have an expense for compensation
paid but does for a contribution.

- quote -

The employee doesn't have a right to contribute his
EMPLOYER'S miles. It's not his property to begin with.
Payment by (including reimbursement) the employer makes the
miles earned by that flight the property of the employer.

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"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:
- quote -

So a business pays salary to an employee and deducts the
cost as a business expense, and the employee recognizes it
all as taxable income. The employee then contributes some
of that income to a charitable organization and he does not
get a deduction because his employer already got a deduction
when paid to the employee?

I'm not suggesting it be deducted more than once. The
business gets a deduction for the cost of the plane fare.
When an employee receives miles toward additional travel
that has a value and *should* be taxed as income to the
employee. The employer, of course, doesn't get another
deduction for what it's already paid.

But if the employee recognizes it as taxable income (which
apparently nobody does at the moment and the IRS has
indicated they won't even try to get anyone to do), he
should be able to deduct the value of those miles (to the
extent he's recognized them for tax purposes) when
contributed to a 501(c)(3) organization.

Stu

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Stuart O. Bronstein wrote:
- quote -

Yes - it cannot be deducted as compensation, but it could
then be deducted as a contribution. You can't deduct it
BOTH WAYS.

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"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:
- quote -

Payments to employees are deductible expenses. Are you
saying that salary received by an employee cannot be
deducted if donated to a nonprofit organization?

Stu

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Stuart O. Bronstein wrote:
- quote -

I disagree that such is income, recovered or not. As I said
in my answer to this (which seems to have been ignored by
those in the main thread), technically part of that amount
that was expensed may have been allocable to the "miles" and
therefore constitute a prepaid expense. Since for business purposes, a
deduction has already been granted, the donation of "miles" based on business
travel is valued at ZERO (otherwise, a double deduction would occur).

The ONLY case where there MIGHT be an allowable deduction
for the miles contributed is if they were earned as a result
of non-deductible travel.

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"D.F. Manno" <dommanno[at]netscape.net> wrote:
- quote -

Someone gives you a bunch of un-matched socks (one red, one
green, one black, one checked, one striped) and you give
them to charity. Some homeless person who is freezing
ultimately makes use of your socks. I would contend that
your deduction is *zero* the value of the socks in your
hands. Only a person with next to no resources would assign
value to them. Even better, the charity you donate them to
combines them with socks donated by thousands of others to
make up matched pairs, which then have value. I would
contend your donation is still *zero* the value of the socks
when you had them.

As I understand it the miled donated to this program are
"odd lots" that individuals have accumulated on airlines
that they rarely fly on, and would normally expire unused.
You can get a free trip for 25k, 25k or 30k, but you can get
bupkis for 5k. The airlines do not allow you to transfer or
sell these miles, but they will allow the charity set up for
this specific purpose to combine miles from various donors
to make up blocks of 25k or 30k miles and redeem this for
travel by servicemen. The airlines are adding value by
changing the rules for the servicemen.

Now if you actually have a block of miles that is redeemable
for a trip, try to value the trip, but make sure you take
into account the *market* value of the trip with all its
restrictions, including the one that says it is
non-transferable. Or you can try to figure the basis, by
comparing what the prices of the tickets you purchased would
have been if the airline did not give you miles, and
treating the difference as your basis. Again I would say
that the value would approximate zero.

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"D.F. Manno" <dommanno[at]netscape.net> wrote:

- quote -

If it's a true gift, I suppose so.

- quote -

Good point. I think many of us were going on the assumption
that miles earned were for business travel that had been
deducted as business expense. If you didn't earn miles for
deductible travel, then you already paid tax for the value
of those miles, and should be able to get a deduction if you
give them to charity.

Stu

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harry_boscoe[at]hotmail.com (Harry Boscoe) wrote:

- quote -

Based on what the law says.

If you received miles for business travel and the cost of
that travel had been deducted, you received an asset of
value (not as a gift) and didn't pay income tax on it.

Technically you should pay tax for those miles, though the
IRS isn't going after it for various reasons. If you claim
them as income and pay tax on them, you can deduct their
value when you give them to charity. Otherwise you can't.

Stu

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Harry Boscoe <harry_boscoe[at]hotmail.com> wrote:

- quote -

Speaking of "deeper analysis," try reading your frequent
flyer program agreement. It probably states quite clearly
that the miles do NOT constitute "property" for any purpose.
Hence, not a capital asset (or ANY kind of an asset, for
that matter).

Here is an excerpt from the Alaska Airlines agreement:

"Accrued mileage and award certificates do not constitute
personal property of the member. Neither accrued mileage nor
award certificates are transferable upon death, as part of a
domestic relations matter or otherwise by operation of law."

MTW

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D.F. Manno <dommanno[at]netscape.net> wrote:

- quote -

Unless the item is a capital asset AND you hold it for more
than one year, your deduction is limited to "basis." Your
basis in an item that your receive as a gift is the basis of
the donor. How much was that ???

MTW

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D.F. Manno <dommanno[at]netscape.net> wrote:
- quote -

First, let's discuss the basis for charitible gifts, of
property you acuqyired as a gift.

I give you my automobile, and you then give it to a charity.

What is your deduction?

Your deduction might be the lower of your cost basis and FMV
on the date you give it, unless you have a holding period of
more than one year.

If your holding period is more than a year, you might take
the FMV when you give it, if that is more, and will not
declare any capital gain.

Why do I say "might" above? Because if you were to try to
claim the higher FMV on the date you give it, the charity
would generally have to hold the property a while, or put it
to the use it is for, namely a car is used to drive around.
If the charity turns around and sells it, your gift amount
is the lower of basis or FMV.

What does all this have to do with deducting Frequent Flyer
Miles? Would you seriously argue the airline made you a GIFT
of those miles, or would it be more likely this was part of
your busines transaction with them?

I would argue the later, and since you didn't pay for them,
your basis is zero. If you donate an item used in your
business the donation is thelower of FMV or basis.

- quote -

This is a bad place to be telling everyone you are going to
take an extremely aggressive position.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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D.F. Manno <dommanno[at]netscape.net> wrote:
- quote -

First, let's discuss the basis for charitible gifts, of
property you acuqyired as a gift.

I give you my automobile, and you then give it to a charity.

What is your deduction?

Your deduction might be the lower of your cost basis and FMV
on the date you give it, unless you have a holding period of
more than one year.

If your holding period is more than a year, you might take
the FMV when you give it, if that is more, and will not
declare any capital gain.

Why do I say "might" above? Because if you were to try to
claim the higher FMV on the date you give it, the charity
would generally have to hold the property a while, or put it
to the use it is for, namely a car is used to drive around.
If the charity turns around and sells it, your gift amount
is the lower of basis or FMV.

What does all this have to do with deducting Frequent Flyer
Miles? Would you seriously argue the airline made you a GIFT
of those miles, or would it be more likely this was part of
your busines transaction with them?

I would argue the later, and since you didn't pay for them,
your basis is zero. If you donate an item used in your
business the donation is thelower of FMV or basis.

- quote -

This is a bad place to be telling everyone you are going to
take an extremely aggressive position.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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I think some deeper analysis may be called for here. If the
FF miles are a capital asset, and if they are more than a
year old, why is a fair market deduction *not* allowed?

"You didn't pay for them" and "You don't have any basis in
them" seem like knee-jerk rejections of the deduction, based
on...I don't know what they're based on.

Harry B.

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kamlet[at]panix.com (Arthur Kamlet) wrote:
- quote -

Somebody gives me an item of value. I turn around and give
it to charity. Are you saying I get no deduction because I
did not declare the item as income?

I donated miles (none of them earned on business travel
because I have _never_ flown on business) to this program.
I'm going to take a deduction and let the IRS challenge it
if it wants to.

--
D.F. Manno
dommanno[at]netscape.net
"They that can give up essential liberty to obtain a little
temporary safety deserve neither liberty nor safety."
(Benjamin Franklin)

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"Wayne Brasch" <waynebrasch[at]stowetel.com> wrote:
- quote -

A charitable organization has been established for this program.

--
D.F. Manno
dommanno[at]netscape.net
"They that can give up essential liberty to obtain a little
temporary safety deserve neither liberty nor safety."
(Benjamin Franklin)

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Sue.Comette[at]uvm.edu (Sue Comette) wrote:

- quote -

This is just a shot in the dark here, but my guess is that
if you don't claim the miles as income, you can't deduct
them when donated.

Stu

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Sue Comette wrote:

- quote -

It may be possible - but only if you have a "basis" in those
miles. By now, I bet that there's probably some court case
on this type of thing.

My Opinion:

Miles based on "business travel" probably don't have a basis
- because they're a hidden fringe of something you have
already received a deduction for.

Miles based on non-deductible travel (e.g. "personal
travel") are the only class where I believe some argument
may be made. However, you then have to apportion the cost
between the cost of your actual trip and how much it would
cost if you didn't earn mileage credits - a difference which
may be ZERO. :-(

Of course, I assume that you are not donating to a specific
serviceman, but to an exempt organization that makes the
decisions of which servicemen get use of the donated
miles....

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"Sue Comette" <Sue.Comette[at]uvm.edu> wrote:

- quote -

I don't believe this would be a deductible donation since it
will benefit individual people. In order for a contribution
to be deductible it needs to be made to a charitable
organization.

Wayne Brasch, CPA, M. S. Taxation

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Sue Comette <Sue.Comette[at]uvm.edu> wrote:

- quote -

I am sure those service personnel will very much appreciate
what you are doing, and this is a good time of the year for
you to be donating miles or money or other useful gifts.

However, since you have never declared the miles as your own
income, you do not have a tax deduction for those miles.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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"Sue Comette" <Sue.Comette[at]uvm.edu> wrote

- quote -

There wouldn't be any deductions because (in most cases) you
didn't actually ~pay~ for the miles.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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