Pnych, the issue is not basis but whether you have income. If you get miles from a credit card, its considered a rebate, or a reduction of the amount you spent as opposed to something you received. Ditto with FF miles I believe.

As for transferability, the fact that there are no laws is a distracting tangent. The law regarding property allows an airline to create miles that by their nature are not transferable. If you attempt to transfer them, you are likely defrauding either the purchaser of the miles or the airline, but arguably don't violate any law by transferring the miles. So the statement is probably correct but should not be the end of the inquiry.

An anology might be if I tried to sell you the Brooklyn Bridge. There is no law against selling bridges. But I don't have the right to transfer the Brooklyn Bridge (because I don't own it; you can't transfer FF miles because you don't own the right to transfer them). If I sell it to you, I'm implying that I have the right to sell you the bridge, and that is basically fraud.

[This message has been edited by LemonThrower (edited 10-29-2003).]