Originally Posted by itsme
So does the above mean that though the FF miles may go to the employer's own account, and he/she can then use those miles for any purpose, including entirely personal ones, the convenience fee for business tax payments will be fully deductible? I considered it a good deal to buy UA miles at 1.245 cpm (actually a tad less, since the convenience fee earns miles too), but if the government will subsidize it so as to bring it down to less than .85 cpm, so much the better. (Is this really kosher, though?)
Disregarding the miles, a business could certainly argue that the fee paid was well worth it for the float and the convenience, and thus the fee would be fully deductible on its own. Businesses pay for and buy all kinds of stuff that many of us would consider extravagant and pointless and the IRS lets it through as deductible.
Technically, it seems logical that if you or your comapny are getting a business deduction for the generation of the miles, personal use of those miles ought to be taxable some way or another.
I am not an accountant, but I've followed this topic over the years, and I have never heard of anybody getting fined over this "avoidance."
It probably also comes down to the quantity of the miles involved as to whether the IRS would care much. IIRC, they have issued statements about FF miles not ordinarily being taxed.