https://www.dansdeals.com/points-travel/airlines/aa/swipe-way-american-elite-status/#:~:text=fee%20of%20%243%2C632.79%20(-,which%20may%20be%20tax%20deductible,-%2C%20ask%20your%20accountantThe business owner can pay those taxes on an AA card for a fee of $3,632.79 (which may be tax deductible,)In my professional opinion, the fee is not deductible, at least up to the FMV of the points received as a result of the purchase.
Courts have ruled that credit card points are considered a rebate on your purchase. This is why they are not taxable for individuals; like any rebate, the CC points earned simply reduce the amount you paid for the item, but there is no income involved. (This is precisely why points earned via referral are taxable; in that case, they are clearly not a rebate.)
Therefore, the actual cost to the business to process the tax payment wasn't $3,632.79, you must adjust the expense by subtracting the value of the rebate you received, i.e., the FMV of the points.
Now, will the IRS catch this if you use your points for a family trip to Hawaii? I'd wager not. But I just want to get the rules straight.
I'd love to hear anyone else's perspective on this.