Seems unclear whether that would include CC bonuses. Lets hope not...
I'm not sure what you think is unclear about what the IRS said. Nothing new there.
What's more interesting is that Citi can report those miles to be worth anything they feel like and you have to pay up on their valuation (unless you contest it, though that may be asking to be audited)
The real question is why Citi is valuing them so highly. Can they actually take a write-off for 2.5cpm if they only pay 1cpm?
""When frequent-flier miles are provided as a premium for opening a financial account, it can be a taxable situation subject to reporting under current law," said Michelle Eldridge, an IRS spokeswoman.
OK, so Citi apparently has that part right.
But what about miles received for using a credit card or handed out by an airline just for taking a trip?
Eldridge said that in those cases, miles wouldn't be taxable because they're more like a rebate."A common analogy," she said, "is buying a $500 television at a retail store and receiving a $50 manufacturer's rebate. It's not income, just a deemed reduction of the cost of the television."
What about valuing the miles? In Citi's case, the bank is declaring that miles received by customers are worth about 2.5 cents apiece. But tax pros say Citi almost certainly acquired them for less, probably closer to 1 cent each.
"Under the income tax law," Eldridge replied, "the amount of income to the taxpayer is the value of the property received, not the cost that the business paid to acquire the property."
Therefore, it doesn't matter how much the miles were worth to Citi when the bank deducted them as a business expense. The value that must be reported by taxpayers is whatever Citi says it is."
