Tango, you don't adress what this would mean to the future of these programs.

Also, you offer 2 different criteria for valuation. First 2 cents per. Second, on redemption. But both of these things may happen in separate years.

How do you deal with someone like me, who only uses miles for last-minute trips or other things that are exceedingly expensive? Or how about if I get 50,000 CO miles from a $200 ticket because of bonuses, then convert those into 100,000 Hilton points and stay in Hawaii for a week.

Or do you charge me for the 2000 miles I earn on a last-minute R/T Y fare to DCA that costs me $1500? I have lost money on this. My basis is $1500, but my "income" is only about $40, based on the .02 per mile formula you propose. Do I then get to deduct the other $1460?

This is preposterous. A phenomenal hassle.
Plus a potentially huge expense.

The end result is that I would no longer be a member of a frequent traveler program. I think others would not do so either. I have no need to expose myself to additional tax liability and hassle.

Tax these things, and I likely never come back to this board, and refuse miles. It would hurt the travel industry incredibly much.