Originally Posted by
travelinfoo
Good question! HHonors has to set a value on the prize in order to be taxed. 1,000,000 if used carefully can be worth up to 1-2 cents/ point. If used poorly, less than 0.2 cents/pt. Pretty wide range. What monetary value have they set on the points?
Whatever the amount that HH were to arrive at, it can be challenged and the amount added to your taxable income reduced. This is especially true if you were to redeem the points prior to filing your taxes. If you can show what the cost would have been had you purchased the rooms and that cost is less than the amount arbitrarily reported to the IRS as income to your SSN then you can have the amount adjusted. Its been done before.
Of course if you find the redeemed value was much higher... just keep your mouth shut and pay the taxes on the arbitrary amount.