How Much is a Donated Miles Ticket Worth?

[Q274]

From the Huffington Post


Rewards points that are acquired for free are not tax deductible because they were not paid for by the person making the donation.  Rewards points are only tax deductible if the points were purchased.  If you purchase them for the sole purpose of donation, you can use it as a write-off. The only time something is deemed tax deductible by the IRS is when it is paid for.




Although this refers to MILES not TICKETS.

Define free, and not purchased, i specifically pay annual fees and and keep certain cards open in order to obtain these miles/points, how is that not purchasing?

[Menachem613]

From the Huffington Post


Rewards points that are acquired for free are not tax deductible because they were not paid for by the person making the donation.  Rewards points are only tax deductible if the points were purchased.  If you purchase them for the sole purpose of donation, you can use it as a write-off. The only time something is deemed tax deductible by the IRS is when it is paid for.


Although this refers to MILES not TICKETS.

And the source for that statement is - a spokesperson for United. 

[Dan]

Define free, and not purchased, i specifically pay annual fees and and keep certain cards open in order to obtain these miles/points, how is that not purchasing?

Fine. So your basis will be $95 dividend by all miles earned on that card 

[Smokey Joe Robinson]

From the Huffington Post


Rewards points that are acquired for free are not tax deductible because they were not paid for by the person making the donation.  Rewards points are only tax deductible if the points were purchased.  If you purchase them for the sole purpose of donation, you can use it as a write-off. The only time something is deemed tax deductible by the IRS is when it is paid for.




Although this refers to MILES not TICKETS.

Not sure the last line makes sense. If you found something, or inherited something, or built something (took wood from your backyard and built a bookshelf) and you can technically sell it for $$, and you donate it, you can't deduct the value of it? I understand why points and miles you can't, because they can't be sold or bartered so in essence they have no intrinsic value on any market.

CMIIW

[Menachem613]

Not sure the last line makes sense. If you found something, or inherited something, or built something (took wood from your backyard and built a bookshelf) and you can technically sell it for $$, and you donate it, you can't deduct the value of it? I understand why points and miles you can't, because they can't be sold or bartered so in essence they have no intrinsic value on any market.

CMIIW

You were doing good until your last sentence.

[Smokey Joe Robinson]

You were doing good until your last sentence.

Still doing good. If selling miles/points are prohibited by the airlines and banks, then they have no real value. On a grey/black market they do; Im not discounting that. As such, the IRS still views them as valueless. Being able to sell something, doesn't mean it has value for purposes of the IRS if that item is illegal etc. (and I know miles isn't illegal)

[Menachem613]

Still doing good. If selling miles/points are prohibited by the airlines and banks, then they have no real value. On a grey/black market they do; Im not discounting that. As such, the IRS still views them as valueless. Being able to sell something, doesn't mean it has value for purposes of the IRS if that item is illegal etc. (and I know miles isn't illegal)

Is your authority a Revenue Ruling or is it right in the Regs?

[username]

$0.

Can I steal miles and be liable to repay?

[ganizzy]

Asked an accountant. He said no basis, no deduction.
If u didn't pay for something or have it for at least a year u can't deduct it.  If u inherit a couch thats worth  1k and u donate it,  u can't take a deduction.  If u sell it,  pay taxes and then donate the money,  then u can take a deduction.

That being said.  As a nonprofit,  i can write a receipt for a non cash donation valued at the price of the ticket.  From my part I'm not doing anything wrong  (which is what i was worried about )
In this case the amount is about 1300 so if he claims it as a deduction he prob won't have the irs down his back.  The chances of it becoming an issue are very slim but it's not allowed as a deduction according to irs rules.

My personal opinion on maaser, is i would deduct the amount i could have gotten selling them.

To throw in another q. If ur earning miles on your organizations spending  (and u pay the annual fee ) are those miles personal or not?

[ckmk47]

That being said.  As a nonprofit,  i can write a receipt for a non cash donation valued at the price of the ticket.  From my part I'm not doing anything wrong  (which is what i was worried about )
In this case the amount is about 1300 so if he claims it as a deduction he prob won't have the irs down his back.  The chances of it becoming an issue are very slim but it's not allowed as a deduction according to irs rules.

To paraphrase:
The non-profit can write a receipt for "tickets worth $XX", but it's (probably) not within IRS rules for the donor to use that receipt for a tax deduction.  But it's unlikely for the IRS to notice what the donor has done.

[ckmk47]

To throw in another q. If ur earning miles on your organizations spending  (and u pay the annual fee ) are those miles personal or not?

This question came up when earning miles was just beginning/ getting popular. It was ruled  (by some judge- in I don't know what court) that the miles belong to the employee.  They were awarded in his name.
I would venture to say that since you pay the annual fee, and if it is your card not the organization's card, then you are lending the org the use of your credit line.  And they have no claim on your miles.

[Menachem613]

Asked an accountant. He said no basis, no deduction.
If u didn't pay for something or have it for at least a year u can't deduct it. If u inherit a couch thats worth  1k and u donate it,  u can't take a deduction. If u sell it,  pay taxes and then donate the money,  then u can take a deduction.

That being said.  As a nonprofit,  i can write a receipt for a non cash donation valued at the price of the ticket.  From my part I'm not doing anything wrong  (which is what i was worried about )
In this case the amount is about 1300 so if he claims it as a deduction he prob won't have the irs down his back.  The chances of it becoming an issue are very slim but it's not allowed as a deduction according to irs rules.

My personal opinion on maaser, is i would deduct the amount i could have gotten selling them.

To throw in another q. If ur earning miles on your organizations spending  (and u pay the annual fee ) are those miles personal or not?

Inherited property has no cost basis? Are you for real?? 

IRC Section 1014 is dedicated to " Basis of property acquired from a decedent."

[YitzyS]

Oh, my!  So I donated 60K MR pts, and I can't deduct it.
Didn't I donate a ticket worth $xxx ?


I know that's asking the Q again, but I'm kind of in shock.  When I told her not to pay me for the ticket, I thought the government would help eat my cost.  I know, I'm not really allowed to have her pay me for the ticket either.

I have a simple solution, I'm wondering why nobody wrote it. (Maybe it's not as good as I think it is...) Why don't you tell the organization that you're selling them the ticket/miles for $XX, and, completely unrelated, you're donating $XX to their organization. Legally I don't see a problem. (Let me know if I'm wrong.)

[ckmk47]

I have a simple solution, I'm wondering why nobody wrote it. (Maybe it's not as good as I think it is...) Why don't you tell the organization that you're selling them the ticket/miles for $XX, and, completely unrelated, you're donating $XX to their organization. Legally I don't see a problem. (Let me know if I'm wrong.)

But if I collect $XX for the sale of the ticket, is that income? Probably.
So that might not help me after all.
Although legally it should work.

[henche]

I have a simple solution, I'm wondering why nobody wrote it. (Maybe it's not as good as I think it is...) Why don't you tell the organization that you're selling them the ticket/miles for $XX, and, completely unrelated, you're donating $XX to their organization. Legally I don't see a problem. (Let me know if I'm wrong.)

It may run afoul of any number of substance over form doctrines in tax law. 

Also, it ruins the purpose, which is to avoid realizing the gain. If you realize the gain and take a deduction, it just cancels out.

[solls108]

$0.

+1