Originally Posted by mahasamatman
I have to disagree. This is the very definition of value.
I think you'd be laughed out of the office for trying this. You could also claim that since one Visa gives you 1 mile per dollar, while another gives you 1 cent per dollar, that miles are worth 1 cent per mile. Or, if you played Delta's Dash to the Gate, that miles are free since airlines give them away. If you get audited and try this, I'd be willing to bet you get slammed with additional penalties - the IRS has no sense of humor.
The IRS may not have a sense of humor, but they are only entitled to tax based on the fair market value of those miles. I think it would be quite arbitrary and incorrect to use the retail price offered by airlines on their website.
I'm willing to bet that very few miles change hands at that retail price of >two cents. It is widely reported that in business to business transactions (i.e., credit card companies buying), the price is close to one cent. It is also widely reported that large numbers of miles are "purchased" via the double miles tax payment route I mentioned above. It's so popular that they had to cap it at 100,000 bonus miles.
Come back to what we agree on the definition of value -- what someone would pay for something. How many people are willing to pay the 2.75 cents per price? Not many (and almost zero FTers!). How many are willing to pay the effective price of 1.23 cents in the double miles promotions? Quite a few more.
What if you win a home theater from Sharper Image? Are you stuck with their price as the FMV when the exact same system sells for 30% less at Wal-Mart (and W-M sells 100x more of them)?