dhuey

IRS phone agents are wrong about 1/3 of the time, and this one is here -- at the very least, what she is saying is highly misleading. What matters is the fair market value of the miles. That's not so easy to determine with FF miles because the rules of the program prohibit the free exchange of the miles. Nevertheless, there are mileage brokers out there, and miles are being bought and sold left and right. In my opinion (rely on it at your own risk), this market is the best way to determine miles' fair market value.

Of course Citibank's cpm is not $0.025 -- that's roughly the retail price at which airlines will sell their miles to you. Another inappropriate measure is the liability airlines record on their books for the miles. That's a tiny amount that merely reflects the extra cost of having an extra person show up on a plane for free.


That's highly proprietary information; no way will Citibank release that.

This one she got right. If you are reporting a lower interest amount than on a 1099-INT, it's a very good idea to include a statement at the end of your return explaining the difference. If you don't you will probably get an automated request for either a correction or explanation.

That's too low. It's about 20% of the retail price and less than half of what you see with the mileage brokers. I've used $0.015 recently.