If you are a small business, or work for a small business, there is really nothing wrong with "selling" them to your client or employer. You just have to pay the tax, but if the dollars are worth it, the tax might be worth it, also.

For instance, I used to work on a client where I often had a choice of booking an $800 ticket or using 25,000 miles. I would print out the itinerary, get reimbursed $800 and use the 25,000 miles.

My employer got $800 from the client and paid me $800. A wash for them. I reported the $800 on my tax return and paid all of the taxes, since I had no basis in the miles. Worked for everyone and sometimes I even cut the client a break by putting less than the full airfare on my expense report. Was also useful to make it appear that I have a small business when applying for business credit cards with sign-up bonuses.

This will not be acceptable to most large businesses. They are too uptight to deal with expenses that are not documented with actual payments and relying on the employee to report the correct income on his tax return. Most payroll departments are very worried about this arrangement looking like a nonaccountable plan, but most small businesses are fine with it.