dhuey

The article from my link two posts up goes over how to do a Schedule B (interest) adjustment to lower the reported FMV of the miles. However, recall that Citi inexplicably issued 1099-MISCs, claiming these miles are a prize or award. That compounds the mess Citi made for its account-holders.

This should have been reported as interest on a 1099-INT. A "prize or award" could be a lot of things, but it can't be something anyone can get as a bonus for opening an account. I looked at the statute, the reg and summaries of cases involving prizes and awards, and every time the prize or award involved some sort of random drawing or accolade for the taxpayer. In other words, someone was either lucky or special -- never simply signed up for a deal available to anyone.