Originally Posted by
Happy
Well, the time value argument when the interest rate is at this current level in the next 2 to 3 years, it would be of very little value.
Besides, even with a mileage bank balance of over 1.5 million, I dont see how it can last 5 years. I pretty much would use them all up in 3 years or less if I do not replenish them - especially now it is not easy to replenish them as easy as before.
Actually this argument has been there all the time - devaluation of award due to inflated redemption requirement or rule changes. When AA did away the 1 free stopover and replaced it with one-way award in May of 2009, almost everyone felt the program has taken a worse turn. But, once we learn more the rules, this has become clear to many of us, that the new one-way system with a stopover at NA gateway is actually a big enhancement. My husband actually says many times now that the One-Way system is a lot better for our needs. And I agree.
The really bad development lately is the BA YQ on AAdvantage award because we gained very little yet lost a lot. This pretty much rules out BA as an option especially for us who live on the East Coast.
The risk is always there, however to me, the risk is remote enough that is not worth for me to rush out to spend all my miles just to avoid this risk.
Except AA, ALL US Legacy Airlines have filed bankruptcy, CO has gone through that twice or three times. Nothing from bankruptcy filing ever stopped the airlines flying, let alone the FF programs.
Of course, same cannot be said with Aero Mexico or Alitalia. So yes, this risk is not 0, but if they can survive 2008 to 2009 finance crisis, I dont see why they cannot survive future yet unknown crisis.
But Happy, this fight should be between each of us and the IRS, if audited. This risk has always been there.
By issuing a 1099, Citi fires the first shot in a war that they shouldn't even be involved with. Citi gets a deduction for what it paid for the miles, regardless of what it puts on the 1099 (and even if it doesn't issue a 1099 at all).
Now the IRS is informed of what Citi thinks the miles are worth, and there is a rebutable presumption that the amount on the 1099 is right. The IRS computer cross-matches to see if the amounts on the 1099s are reported. If a different amount is reported by the taxpayer, a manual set of eyes looks at it at the IRS. Sure, if a schedule is attached that explains or reconciles the difference the IRS might not pursue the issue (but no one knows for sure and the treatment may be different for each of us).
Citi could have followed the precedent of every other financial institution and not issue 1099s, since the value of miles is subjective and they receive no benefit from issuing the 1099s. But they broke ranks, used a ridiculous value, and forced their own customers to make a manual adjustment on tax returns to get to the result that most of us genuinely believe to be correct (a value far less than 2.5 or 2.75 cents per mile). And they put their competitors like Bank Direct in an awkward position.
Can't you see why many of us are angry?