Howard Kaikow wrote:

- quote -

Correct. If you use miles that were earned on "business"
travel for "business" purposes, it is my opinion that no
taxable income is realized. The potential tax problem comes
about when miles earned on "business" travel are used for
"personal" purposes.

- quote -

As a public service <g> , I have temporarily posted the two
items I mentioned here:

http://home.centurytel.net/mtwingcpa/flyer.pdf

MTW

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Ravi Desai <ravster3[at]hotmail.com> wrote:

- quote -

You mean like a Discover Card has?

That's a discount on purchases.

If those purchases are deductible, then the deductible
amount should be 99% of the "raw" cost.

If they're personal, then it's just a slightly lower price.

Seth

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What about cash-back plans(like if you get 1% of your
payments back, for example)? Are these taxable? or just
directly put against your bill or something?

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"MTW" <mtwingcpa[at]yahoo.com> wrote:
- quote -

So, if I am paid to attend a meeting, if I use frequent
flyer miles (most of which were earned many tears ago whilst
an employee) to get the plane ticket, but I am not paid for
the plane ticket, then I'm OK?

Or, more likely, I use the miles to upgrade from coach to
Business class.?

P.S.

Where do I find copies of such IRS Announcements? Is there a
URL?

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"David Woods, EA, ChFC, CLU" <dwoods[at]woods-financial.com> wrote:
- quote -

Because, in daze of yore, the IRS did try taxing use of the
miles. I lost track of the status of this more than 10 years
ago. As of then, as I recall, there was nothing definitive.

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Howard Kaikow wrote:

- quote -

Note the following quote from IRS Announcement 2002-18:

"Consistent with prior practice, the IRS will not assert
that any taxpayer has understated his federal tax liability
by reason of the receipt or personal use of frequent flyer
miles or other in-kind promotional benefits attributable to
the taxpayer's business or official travel. Any future
guidance on the taxability of these benefits will be applied
prospectively.

This relief does not apply to travel or other promotional
benefits that are converted to cash, to compensation that is
paid in the form of travel or other promotional benefits, or
in other circumstances where these benefits are used for tax
avoidance purposes."

For an example of the situations describe in the last
sentence, see Charley TC Memo 1993-558 wherein the court
held that certain travel credits received in a convoluted
exchange for frequent flyer miles WERE taxable.

MTW

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"Howard Kaikow" <kaikow[at]standards.com> wrote:

- quote -

Frequent flier miles are not taxable and I'm not sure why
you thought they were.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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I have not traveled for quite some time, but expect to
travel again soon.

Are there published rules on when the use of frequent flyer
miles to get free travel, or an upgrade, is considered to be
taxable/ If so, are the rules in an IRS pub? If so, which
one?

--
http://www.standards.com/; See Howard Kaikow's web site.

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