Originally Posted by
uszkanni
I have to disagree with you on these points. As I understand it, Bank Direct's model is to provide miles to people on a monthly basis and in direct proportion to their account balances. Not that my opinion holds sway with anyone but I think this is clearly a form of interest; just miles instead of cash. BD may not be issuing 1099-INTs and maybe they're on firm ground in not doing so (and maybe not), but I think these awards are clearly interest payments in miles rather than cash.
I also disagree that miles awarded in less than 25,000 increments have no value. First of all, a 1099 reports income on a yearly basis. It makes no difference if you get 100,000 miles all at once or over a 4 month period. It's the aggregate amount that matters. Secondly, even 25,000 miles can have great value. For AA, that's the difference between a business class and first class ticket from NA to Asia/Europe. The fact that flight awards are hard to come by may affect your valuation of the miles but not someone else's. But it's not your or my valuation that matters; it's the value assigned to the miles by some independent "authority" (whether it's an open, freely traded market or the "MSRP"/ARV as determined by AA or Citi). Also, the fact that they might go unused is not the IRS' problem. If you or I choose to let our miles expire that's a decision we make, based on whatever factors are important to us. Just like if we decided to burn $100 bills because they cluttered up our wallets.
Of couse businesses play by different rules, but let's not go there.
I don't disagree with anything you said. However, it is clear that Bank Direct values the miles at $0.00. A lot of institutions that take the position that a 1099-MISC, rather than a 1099-INT, is applicable issue few enough miles per recipient to take a reasonable position that no 1099-MISC is required. Not so with Bank Direct. They issue an incredible number of miles to those with large balances and the value of those miles would exceed $600 even if the value of the miles were just barely above $0.001 per mile.
Every single one of us would value the miles differently. The value might be a little more than $0.00 (like $0.000001 instead) per mile, but it sure isn't 2.5 cents per mile.
A lot of the trips I have taken with miles would simply have not occurred if I hadn't had the miles. I spent cash on those trips that I otherwise would have invested. Did the miles have a negative value? I am worth less now because I received the miles.
I recently stayed at several Hiltons and Westins on a trip using miles. If I hadn't had points, I would have stayed at Motel 6 or Red Roof. Do I value the points based on the room cost of Motel 6?