Okay, here's the additional information. In the case of Reginald Turner, Tax Court Memo. Opinion 1954-38, Prentice Hal TCM Paragraph 54,142 (1954), the tax court reviewed the proper tax payable by a person who won first class steamship tickets, and traded them in for tourist tickets for his whole family instead. The tax court found that the prize was taxable to him at the value of the tourist tickets, rather than the full value of the first class tickets.

I think a similar situation can apply here, depending upon how your friend uses the 80,000 Clicks. Thus, for example, if I was awarded a first class ticket, I would claim if for tax purposes as the value of a coach, and the value of the miles (at .02 per mile) needed to upgrade to that ticket, not the dollar cost of the first class flight.

Hate to do this folks, but my partners would probably get mad at me if I don't. This is not to be construed as legal or tax advice. Our firm only provides actual legal or tax advice to clients who have retained it for that purpose. You should consult your own legal or tax advisor before making your own decisions with respect to legal and tax matters.

That feels better, now that I got that off of my chest.