Originally Posted by
zombietooth
There is no doubt that this is a net win for the prize winner. I am just pointing out that the 275K is set in stone (while the flight compensation is variable), and you will pay 33-50% taxes on that amount depending on your state, etc. So, a minimum of 90K comes off of that, leaving you with 185K net. How much of that 185K do you want to pay in taxes for your flight redemptions? So, let's say you and a SO decide to fly in J as much as possible. At ~7.5-8K in taxes per trip, you'll have 23-24 trips before you spend all of your bonus cash.
The question is, would you fly every 2 weeks and use up all of your bonus cash paying taxes or would you fly less and only take trips that would allow you significant time to enjoy yourself on the ground? My argument is that most would choose the later and, if that is the case, there will be significant breakage to UA's benefit.
Yeah I mean....I guess I'll have to make that decision if I win.
I agree that most people won't max out 26 trips. And even if someone uses 26 trips, they're not all going to be int'l J. I love int'l J trips as much as anyone, but I'm sure I'd use a couple of those to go to the beach, or visit friends, or grab dinner at that one restaurant I liked in Napa.
But also, weren't you previously arguing that it's going to be really hard to argue UA's declared valuation if the 1099 you for the full $784k? The most likely scenario is that whoever wins this just accepts UA's declared ARV, allows UA to withhold the entire $275k (conveniently almost exactly 35% of the ARV), and proceed to take like 10 little trips and maybe one or two big trips. Oh, and have their photo taken for UA marketing. I'd argue that if any meaningful portion of that $275k hits the winner's bank account, they've got an advisor or CPA who has already sorted all this out for their particular tax situation and/or is willing to assist in filing a FMV for the prize that is significantly different from UA's ARV.