Originally Posted by
garykung
IRS does not really care how the T&Cs are written. FWIW - even you are correct, what IRS cares is who has the actual control of the points/miles, i.e. nominal owner v. beneficiary owner. Because the account holder is the beneficiary owner, IRS can in fact assess tax against him/her.
This has gone to court several times, and each time the court ruled that the airline/hotel is the owner of the miles/points and has the right to cancel the account and confiscate the miles/points. In some cases, the airline also canceled tickets that were purchased with those miles.