Originally Posted by janetdoe

I imagine that the airlines also have a vested interest in keeping miles non-taxable. It's a lot easier to peg a taxable value to 100k miles transferred in a single transaction. On AA, you can redeem 100k miles for a RT first class domestic ticket or a 1-way Business class fare to Europe with no blackout dates, so that is easily and immediately worth thousands of dollars. In the eyes of the IRS, is this really that different from someone giving you a $1000 or $10,000 AA voucher? If it occurred on a wide scale, I'm sure the IRS would take notice.