AAdvantage Member Wins One Million Miles, Donates All To Charity

 
Old Jan 21, 08, 4:02 pm
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AAdvantage Member Wins One Million Miles, Donates All To Charity

Road Warrior Grand Prize Winner Donates His Winnings to Help Others

American Way Magazine Contest Resulted In Nearly 7,000 Expert Entries

FORT WORTH, Texas, Jan. 21 /PRNewswire-FirstCall/ -- For the sixth year, American Way, the inflight magazine of American Airlines, sought to answer the big question: What does it take to be a true Road Warrior? The magazine offered readers the opportunity to divulge their travel expertise with a chance to win the Grand Prize, which included 2 million Hilton HHonors(R) bonus points and 1 million American Airlines AAdvantage(R) miles, by entering their best travel photos, writing clever haikus, and answering multiple choice questions, all for the title of "Road Warrior."

Nearly 7,000 readers responded, providing insights about life on the road. The Jan. 15, 2008, issue of American Way (http://www.americanwaymag.com/) features the five winners, plus intriguing contest photos, travel advice, and more in this ultimate guidebook for Road Warriors.

But the big story from the 2007 contest is the Grand Prize winner, Kaye Wilkins, M.D. of San Antonio, Texas. He is an orthopedic surgeon who has donated all of his newly awarded 2 million Hilton HHonors(R) bonus points and 1 million American Airlines AAdvantage(R) miles to the Pediatric Orthopedic Society of North America (POSNA). POSNA will use the miles and points for airline travel and hotel stays for physicians worldwide to come to the United States to attend medical training seminars.

"I felt that the use of these miles and points could help many doctors come to the United States for training and that, ultimately, people in underdeveloped countries will get the medical help they need. POSNA can get so much more out of this fabulous prize than I ever could for my own personal use," said Dr. Wilkins.

"The Road Warrior issue is always the hardest but most rewarding issue we do. And this year it has been especially rewarding seeing the satisfaction Dr. Wilkins has had in donating his prize to such a great organization. Being a 'Road Warrior' is more than just miles flown; it's the experiences that precede and follow it," said American Way Editor Sherri Burns.

A Second Prize winner, Jack Jensen of Oak Brook, Ill., and three Third Prize winners, Brad Dupray of Corona, Calif., Chris Newberry of Dallas, Texas, and Tracey McCormack of Los Angeles, Calif., round out the five Road Warrior winners.

Contestants were eligible to win 2 million Hilton HHonors(R) bonus points to use at any Hilton family hotel in the world, as well as 1 million American Airlines AAdvantage(R) miles. Other prizes included a Bose(R) Lifestyle(R) 48 home entertainment system, a SoundDock(R) digital music system, a pair of QuietComfort(R) 3 Acoustic Noise Cancelling(R) headphones, Panasonic Toughbook(R) W5 laptop computers, vacations to Los Cabos and Cancun from AAVacations, and one-and-two year Admirals Club(R) memberships.

More than 50,000 top-tier American Airlines customers have participated in the Road Warrior contests since 2001. Feel like you have what it takes to be considered a bona fide road warrior, but missed out? Check out American Way magazine or visit http://www.americanwaymag.com/ this summer for information about the next contest.

[Rest of press release deleted]
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Old Jan 21, 08, 4:30 pm
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but did he deposit them in his AA account first? Status!
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Old Jan 21, 08, 4:32 pm
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A good move since he would have been liable for a tax bill of relatively large proportions should he have accepted.
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Old Jan 21, 08, 4:36 pm
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Originally Posted by AA53 View Post
A good move since he would have been liable for a tax bill of relatively large proportions should he have accepted.
I dont think the IRS has figured out how to tax miles yet ... have they?

Edited to add: STOP SCARING ME LIKE THAT

apparently not... doesnt mean they won't in the future though (although the term "prospectively" is a bit comforting)...

http://www.hr.com/servlets/sfs?&t=/D...iles%253F%255C

Since the IRS has not yet resolved those issues with regard to personal use of business-related frequent flyer miles, it has decided not to treat such benefits as taxable income at this time. The IRS has not closed the door on such taxation completely, however. The announcement indicated that future guidance may reflect a different view, clarifying that "any future guidance on the taxability of these benefits will be applied prospectively."

Last edited by muddy; Jan 21, 08 at 4:44 pm
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Old Jan 21, 08, 4:40 pm
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Originally Posted by muddy View Post
I dont think the IRS has figured out how to tax miles yet ... have they?
in this case they did. when you win anything the prize has to have "value" attached to it. you are taxed on the value of the prize.
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Old Jan 21, 08, 4:51 pm
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Originally Posted by nacirema View Post
in this case they did. when you win anything the prize has to have "value" attached to it. you are taxed on the value of the prize.
Wow! you're right! (At least according to the following article) .... around $7700 in net taxes depending on tax brackets:

http://www.smartertravel.com/travel-....html?id=11375

Tax reform, anyone?
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Old Jan 21, 08, 4:57 pm
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Dr. Wilkins was my pick for the top road warrior. Good going Doc!! You've done a truly wonderful thing and can serve as a role model for all of us. Thanks!
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Old Jan 21, 08, 4:58 pm
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Originally Posted by muddy View Post
I dont think the IRS has figured out how to tax miles yet ... have they?

Edited to add: STOP SCARING ME LIKE THAT

apparently not... doesnt mean they won't in the future though (although the term "prospectively" is a bit comforting)...

http://www.hr.com/servlets/sfs?&t=/D...iles%253F%255C
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Old Jan 21, 08, 5:09 pm
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Originally Posted by muddy View Post
I dont think the IRS has figured out how to tax miles yet ... have they?

Edited to add: STOP SCARING ME LIKE THAT

apparently not... doesnt mean they won't in the future though (although the term "prospectively" is a bit comforting)...

http://www.hr.com/servlets/sfs?&t=/D...iles%253F%255C

IIRC, a while back someone won miles in an AA contest and purposely turned down the prize for not wanting to pay taxes on it.

Though I'm sure being a surgeon, that's probably not an issue for Dr. Wilkins.
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Old Jan 21, 08, 5:10 pm
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different animal

contest prize - very much taxable

earned miles - not, at least for now
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Old Jan 21, 08, 5:22 pm
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Originally Posted by nacirema View Post
different animal

contest prize - very much taxable

earned miles - not, at least for now
Sorry, my last reply went out reply-less. My estate lawyer tells me that the IRS values this asset at $.02/mile if left to heirs. I'm pretty sure that Dr. Wilkins will be allowed a $20K deduction for his charitable contribution of AA miles alone, but I think he'd have to accept the 20K as income first to do this. Any tax lawyers or CPA's out there?
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Old Jan 21, 08, 5:24 pm
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Originally Posted by nacirema View Post
different animal

contest prize - very much taxable

earned miles - not, at least for now
Interesting writing style.

But absolutely correct information.
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Old Jan 21, 08, 5:26 pm
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Originally Posted by AA53 View Post
A good move since he would have been liable for a tax bill of relatively large proportions should he have accepted.
Interesting point.

I wonder what that bill would have been.

Is a million miles valued at $20,000?

Last edited by Landing Gear; Jan 21, 08 at 10:20 pm Reason: typo corrected
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Old Jan 21, 08, 5:50 pm
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Originally Posted by Landing Gear View Post
Interesting point.

I wonder what that bill would have been.

Is a million miles is valued at $20,000?
if the link I posted above in an earlier post in this thread is correct, it would be $7700 net taxes due for someone in the 35% bracket.
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Old Jan 21, 08, 5:57 pm
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I won a trip to Hawaii last year at a conference including airfare, hotel, and car. But when I did the math, the taxes were more expensive that what I could do the trip for if I used miles and/or sale fares from LA (they valued the trip at $3500). Plus, you had to schedule the trip within 30 days for use within the next year. I could not plan that far in advance. So I donated the trip to the local Make-a-Wish Foundation (which my brother is involvd with) -- they used it as part of a silent auction. Everyone came out ahead.

The third party company that handled the prizes for the conference company had a way for me to sign over the trip to charity without having to accept it as income. In theory accepting as income and then donating should be a wash, but you never know until you see where all your other deductions come out.

Certainly a lot of folks who win prizes get screwed on taxes - especially if the delcared value is higher than it really should be (like the HHonors points in this case - who knows what those will be worth by the time a winner tries to use them). If someone who is going paycheck to paycheck (or is in debt) wins a $40k car - the taxes would be a hard one-time expense to handle. They would probably need to sell it off. Whereas some of us would find it a great deal - a $40k car for $16k or so - and could even get a loan if the cash flow was an issue.

In Dr. Wilkins case, it sounds like the charity's use of the miles was the main driver, which is great.
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