<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by pinniped:
For the IRS to call you on this, wouldn't they have to acknowledge the value of a frequent-flyer mile? If they do that, then wouldn't they have to acknowledge every coupon you clip out of the Sunday paper as income? It's the same concept...
I would think that a charitable donation in order to receive a coupon or discount at another merchant is still deductible. But then again, I'm not a lawyer...</font>
Not meaning to be snide, but the last sentence says it all.
The IRS has always acknowledged that the miles have value, they've simply said they choose not to tax the receipt of them
as income ancillary to business travel, unless the recipient converts them to cash or a cash-equivalent. For instance, if you win them in a contest, you'd better believe the IRS will come knocking on your door for its "share".
As to coupons in newspapers, those are a discount, and as such simply lower the amount you pay for the item. Not taxable as income, any more than the difference between regular price and "sale price" is taxable; however, in some states you may still have to pay sales tax on the "before coupon" price.
As to deductable amount when you contribute to a charity and they give you miles for it, I believe the charity tells you (in the "receipt" they send you) that the deduction must be reduced by value of the miles you got for the contribution (usually set at about 2.5 cents per mile). Same as when you get anything else for your contribution, whether it's a subscription to a magazine, a backpack, an umbrella, a t-shirt, whatever (except things with no or only nominal value, like a pin).
On the question of tax deductions for contributing miles, or for contributing boxes of cereal after taking off the "miles" coupons, run a "search" for the words "tax deduction" in this forum, and you'll find lots of discussion on the subject.
Tax laws are not "intuitive", you really *do* have to be a lawyer (or accountant).