Avoiding a deductible expense you otherwise could have had is not the same thing as having a deductible expense. The logic behind taking a deduction for an award ticket "purchased" with miles you didn't pay for is the same as that behind taking a $500/night deduction for a stay at the Ritzus Maximus when you stay at Motel 6 for $50, or deducting the cost of a steak dinner after eating a PB&J sandwich you brought from home in your room. You didn't pay for a $500 room, a steak dinner, or this plane ticket, though you could have. If you don't spend money, or use something for which you previously spent money and for which you therefore have a cost basis, there is no deduction. Period. How you impute a value to the award is irrelevant: you cannot deduct 5¢ for it. (Taxes and fees you may have paid in conjunction with it, such as the security screening fee, are deductible.)

You'll probably get away with it unless that part of your return is audited for some other reason, as it's probably not material enough to raise an audit flag by itself, but that doesn't make it legal.

If you had paid for the miles, as in some airlines' mileage purchase programs, that might establish a cost basis and thus justify a deduction, but I'm not 100 percent certain that it would.

(Having said all that, keep in mind that tax advice you get here is worth at most what you paid for it.)