Programs: AA PLT; UA 2P; disillusioned SWA RR member
Posts: 5,318
Couple of comments:
#1: The unofficial justification I've read for Coupon Connection is that the forum simply provides a way for folks who are already friends -- for reasons unrelated to trading coupons (namely, folks who came together under the common interest of FF/hotel programs) -- to find out about opportunities to make exchanges. Thus it is more akin to "gifting" to a friend (from whom you receive friendship in return) than selling, even though there is a bilateral exchange. I'm not going to pass judgment on this rationale, but this is what I've read here.
#2: I think the airlines are in a very gray area if they seize miles you purchased without refuding the purchase price. I think they are 100% within their rights to seize miles -- without any compensation to you -- that you obtained by flying, car rentals, credit card spending, etc. I am certainly not a lawyer, but I think they'd have a hard time convincing a court that they can just seize miles you purchased directly, and not give you a refund.
Even after reading through all 10 (!) pages of this thread, I have a stupid question... is it allowed for an AAdvantage member to purchase a ticket using his/her miles for another person (assuming it was a true gift with no payment in return)? Sorry to be so oblivious!
Programs: AA EXP-1.6MM, Hilton Diamond, ManU & Chicago Bears #1 Fan
Posts: 9,797
Quote:
Originally Posted by DuckDuckSwan
Even after reading through all 10 (!) pages of this thread, I have a stupid question... is it allowed for an AAdvantage member to purchase a ticket using his/her miles for another person (assuming it was a true gift with no payment in return)? Sorry to be so oblivious!
#2: I think the airlines are in a very gray area if they seize miles you purchased without refuding the purchase price. I think they are 100% within their rights to seize miles -- without any compensation to you -- that you obtained by flying, car rentals, credit card spending, etc. I am certainly not a lawyer, but I think they'd have a hard time convincing a court that they can just seize miles you purchased directly, and not give you a refund.
Why? When you buy a ticket and earn FF miles, it is under their terms of service. These terms of service explicitly prohibit you from selling the miles.
I don't see that it's even a gray area. The ToS says you are going to lose your miles if you try to sell them. And then they do exactly that.
Location: Primary: LAX Secondary: JFK and LHR Currently: LAX
Programs: AAdvantage Platinum, Admirals Club, TrueBlue, AF/KLM Flying Blue
Posts: 369
Quote:
Originally Posted by jragosta
Why? When you buy a ticket and earn FF miles, it is under their terms of service. These terms of service explicitly prohibit you from selling the miles.
I don't see that it's even a gray area. The ToS says you are going to lose your miles if you try to sell them. And then they do exactly that.
When you fly a paid flight, you pay for your transit, NOT the miles. The miles are purportedly a gift/reward from the airline.
When you buy miles however, there is no gift/reward involved. You actually pay for the miles! You buy those miles as a commodity, and thus they become your property. Though, I would not be surprised if the RRs stipulate that you give AA free money and they grant you free miles in return... or something of the sort.
__________________ OpUp Aviation/Travel News Blog: Click Here
You give them $, they give you tickets and miles. Why should the IRS tax the miles any more than they should tax the tickets? The IRS has decided miles from employer paid flights are not taxable compensation.
See post 144. They are not "giving you" anything in the property sense. You are getting a bailment. Just like the dry cleaner and parking lot attendant don't have to pay tax on the clothing and car that you give them.
That is an interesting theory.
I wonder if any lawyers in this group could weigh in on that idea.
That theory did come from a lawyer, and you aren't going to ever find a definite answer because there isn't one. Common law is fluid and you could look at miles under a host of theories (contract and property law being the most apparent ones).
I think part of the problem with this discussion is that "gift" has a very specific meaning in the eyes of the law. Once a gift is given and accepted - with very few exceptions, such as a gift given on a deathbed because the person thinks they will die, but ultimately survives - it is irrecovable. Thus, it is hard to view AA as "gifting" miles while still retaining a property interest in them. I think that's why the idea of a bailment makes much more sense. In that case, AA is giving part of its interest to you, but that transferred interest is limited and AA retains legal control of the miles.
When you fly a paid flight, you pay for your transit, NOT the miles. The miles are purportedly a gift/reward from the airline.
When you buy miles however, there is no gift/reward involved. You actually pay for the miles! You buy those miles as a commodity, and thus they become your property. Though, I would not be surprised if the RRs stipulate that you give AA free money and they grant you free miles in return... or something of the sort.
You're buying miles - UNDER THE TERMS OF SERVICE. And the terms of service are that you lose any rights to those miles if you sell them. I can't see why that wouldn't be enforceable.
Is this true? I thought donated miles weren't worth anything for deduction purposes? Is it just because they have a declared value when you win them?
Donation deductibility also factors in your basis (your cost of acquisition). You didn't pay anything for the miles (you paid for a fare), therefore no donation. At least is is my understanding of how the Service has interpreted this.
Declared value is the basis for taxing the win.
Thanks,
bex
--
I am not offering tax advice with this post
Programs: AA EXP 2MM, OW Emerald, QF Bronze, Marriott Silver, Starwood Gold; National Emerald
Posts: 2,358
Quote:
Originally Posted by JDiver
they are, AFAIK, AA's miles, which (also IMO) is part of the reason we do not pay taxes on miles, why we do not gain any tax benefit from donating miles to acceptable charities and why AA can enforce their terms and conditions on how they are to be used - or not.
Wait a second--back up. I won 20k miles from an AA promotion/contest, and they said I do have to pay taxes on them.
Miles acquired through flying/etc. are part of the services/products we buy when we get tickets, promotional products, etc., thus we have already paid taxes on those miles (through the sales taxes).
Steve
__________________
AA Miles 1/30/06 = 61k => 5/24/07 = 1MM => 5/6/09 = 2MM
No Work Miles ooFlyerTalk oooMy Flight Memory
Yup, miles won in contests, etc. are :gasp: taxable. And worse, the airline tends to try to inflate the value of those miles (the most expensive flight you could take with them at full Y rates, I suspect,) so then it is up to the recipient to prove the miles are less valuable than that. (Maybe that fits with the bailment issues above - and miles we win - or presumably miles we buy - do not cause any such bailment.)
Miles we earn as FFs are not taxable, as you say, thank goodness. I'm not at all sure we have paid taxes on them via sales and other taxes, however, and from some airlines' T&Cs, I think they get to deduct for miles we contribute to charities if they are used.
Quote:
Originally Posted by steve32
Wait a second--back up. I won 20k miles from an AA promotion/contest, and they said I do have to pay taxes on them.
Miles acquired through flying/etc. are part of the services/products we buy when we get tickets, promotional products, etc., thus we have already paid taxes on those miles (through the sales taxes).
Steve
__________________ Lend a hand up with Kiva; far more than a hand out.
Programs: AA (EXP, 2MM), Starwood (Gold), Hilton (Diamond)
Posts: 1,729
Quote:
Originally Posted by DCAstudent
The professor said he would consider miles to be a "bailment," similar to, say, when you leave your clothes with the dry cleaner or leave your car and its keys with the parking lot attendant in the morning. You are giving them your property to hold temporarily and they may use your property for very limited purposes (the parking lot attendant may park your car, but not drive it around town; the dry cleaner my launder your shirts but not wear them).
I don't know the law, I'm not a lawyer, and I'm aware that trying to apply what seems obvious to the law is likely to be wrong, for various reasons.
Still, this "bailment" theory raises all sorts of questions. For one, the examples you mention all involve the bailor (such as you) letting the bailee (such as the dry cleaner) hold your property in order to provide a service for you (such as cleaning your suit). There's also generally a separate payment for the service, of course. I'm having a hard time fitting FF miles into this analogy. To do so would seem to require that the airline temporarily give you the miles in order for you to provide a service to them, for which they pay you separately. This all seems quite backwards.
Furthermore, the miles are available for your benefit, not the airline's benefit. You use them (or not) as you desire for your needs. This seems completely different than the dry cleaner who must not use your shirts for his own benefit and must only use the shirts to meet your needs.
To me, being totally untrained in the law, a better analogy seems to be creative content such as music or movies or even software. When you purchase a DVD or CD or a software program, you are agreeing to use the work under certain limited terms and conditions, such as not making copies. Generally, the company that created the work desires your use to be as restricted as possible, while you desire total freedom. I believe that courts have ruled that some agreement provisions are not enforceable, so it's possible that the same logic would apply here -- it's possible that some restrictions wouldn't hold up.
=> 5/24/07 = 1MM 
=> 5/6/09 = 2MM 
ooo
