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Old Sep 7, 16, 5:38 pm
Join Date: Oct 2002
Location: NYC
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A lot of armchair lawyers here.

Re fraud, it hasn't been stated why the policy exists. It may be to have employees be rested after the flight, productive during the flight, or both.

On the other hand, maybe the employer's attitude is "you have a tough job and we want to be happy and not quit and join a competitor or burn out and take a job that doesn't involve travel". Or perhaps "we would like to pay you more, but that creates some internal issues, but instead, go nuts with the T&E". No fraud. We don't know which.

Re taxability, it is taxable, open and shut.

For those who wonder if there are any cases, there are few involving frequent-flier miles, but Charley v. Commissioner from 1996 is somewhat on point. Charley was entitled to fly in first class to travel to clients. He would buy a first class ticket, submit the receipt for it, then exchange it for a coach ticket, upgrade it to first using his miles, and pocket the cash difference.

The difference, the Tax Court and Ninth Circuit held, is taxable income.
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