AMEX 1099-INT or 1099-MISC who got one?
Feb 11, 2024, 8:30 am
#63
Join Date: May 2002
Location: EWR/JFK/LGA
Programs: DL Silver, AA, UA Silver, Hilton Diamond, Marriott Gold
Posts: 389
Certified bean counter here who has been preparing tax returns for many years and has lots of experience with the IRS. What I have done for both myself and my clients who have received a 1099 for the bonus points, on Schedule B I enter the full amount reported on the Form 1099 and they make a correction entry to discount the amount by 40%. I also include an attachment from the Amex website where they value 10,000 points at $60.00 with an explanation note as to why I adjusted the valuation. This has never been questioned, including one client where the IRS did ask for additional information regarding something else on the tax return and never questioned the change in valuation of the Form 1099.
As long as you can provide the IRS relevant substantiating documentation as to why a valuation has been changed, i.e., from the merchant website, like-kind sales, etc, the IRS will accept and usually not question it. Word of warning - as with anything else, one needs to be truthful. I have been to many IRS seminars where they have shown taxpayers trying to abuse this by providing either undervalued or fraudulent valuations. Remember, contrary to popular belief, the IRS is not stupid and will pick up anything that is not within the norm.
A number of years ago I had a client who won big on a television game show and was provided with a 1099 for the total amount won using the "manufacturers suggested retail price". This was at a time that the economy was not doing well and many things were heavily discounted. We were able to provide either current advertisements from multiple other merchants demonstrating what the item was actually selling for, which on some items was less than 50% of the MSR price. We regard to the car that they won, my client went to two local dealerships and was able to obtain "purchase orders" for the same model which was thousands less than the valuation on the 1099.
Since game shows are taped in California, my client was liable for taxes in California as a non-resident, to their home state and the Federal government. By taking the time to obtain valuations, my client saved about $28,000 in taxes, which at the time (and still is) not chump change.
As long as you can provide the IRS relevant substantiating documentation as to why a valuation has been changed, i.e., from the merchant website, like-kind sales, etc, the IRS will accept and usually not question it. Word of warning - as with anything else, one needs to be truthful. I have been to many IRS seminars where they have shown taxpayers trying to abuse this by providing either undervalued or fraudulent valuations. Remember, contrary to popular belief, the IRS is not stupid and will pick up anything that is not within the norm.
A number of years ago I had a client who won big on a television game show and was provided with a 1099 for the total amount won using the "manufacturers suggested retail price". This was at a time that the economy was not doing well and many things were heavily discounted. We were able to provide either current advertisements from multiple other merchants demonstrating what the item was actually selling for, which on some items was less than 50% of the MSR price. We regard to the car that they won, my client went to two local dealerships and was able to obtain "purchase orders" for the same model which was thousands less than the valuation on the 1099.
Since game shows are taped in California, my client was liable for taxes in California as a non-resident, to their home state and the Federal government. By taking the time to obtain valuations, my client saved about $28,000 in taxes, which at the time (and still is) not chump change.