<font face="Verdana, Arial, Helvetica, sans-serif" size="2">But frequent flier miles are different. You paid nothing for them, so you have no tax basis, so your entire proceeds represent taxable income. You could argue that the miles were included in the cost of the ticket and therefore you DO have basis, but since the tickets are sold for the same price to people who aren't members of the mileage program, you'd probably lose that argument.</font>
I can't imagine that there is an issue with selling miles earned on tikets that you paid for, but it certainly would be different if you sold miles on tickets paid for by your company.
In any case, unless you are willing to risk all of the rest of your miles and really need the cash, I would stay away from it. THe airlines are far too clever these days to risk this.