Congratulations on the win. But if with federal and state taxes, you are in a 40% bracket, it may not be so great a thing. $10K out of pocket now in taxes to bank 1M WorldPerk miles for future use subject to the restrictions on them? I seem to recall someone declining such a prize because they felt that the tax obligation would effectively cancel the benefit.

Perhaps the carrier will go beyond the 1099 and explain to you the basis for that $25K, or 2.5 cpm, valuation. I expect it is somehow consistent with the "retail" value as established by what some people pay directly to purchase miles. But you can be sure they sell miles for much, much less to credit card issuers (wholesale value?) and carry outstanding miles on their own books as a much, much, much lesser liability that 2.5 cpm. In any event, if they will tell you something, then it may be useful when you challenge the value as too high.

Within the past 3 months or so, the Wall Street Journal had an article about Air Canada and its FFP. That had something in it about the cost to the airline of mileage. And while their valuation for bookkeeping and reporting purposes may be a different matter, I still think it might be helpful to you to have that sort of "inside" information when making your case for a valuation of <$25K.

I expect people are selling or trying to sell miles/awards on E-Bay, and that too may be of some help in setting the value. Document what you could buy/sell miles for from "alternative" sources as further proof of value if it will suport a less then 2.5 cpm, as I expect it would.