boomdog

Yeah, and suppose I charged 2k$ to charity, and got 100k BA miles. These are probably worth 2k$. Is that nondeductible?

dweick

Seth,

The IRS doesn't say "it doesn't matter who you get the benefit from". It does provide numerous examples and all of their examples involve getting a benefit from the organization. They also describe rules requiring the charity to disclose what part of your donation resulted in a benefit to you. All of your donation went to the charity and they returned none of it to you in the form of a benefit.

The benefits aren't conditioned on making the charitable donation to the charity, you get exactly the same "benefits" if you bought $500 worth of cheese from your local grocery store. It's a benefit of using your credit card not of making a charitable donation.

Finally, how do you value a token 500 miles? 500 miles has no value. You can't sell them and you can't redeem 500 miles, in general. There is the possibility that they will expire unused.

If you could impute a reasonable value to the miles I suppose you could make an argument that they represent income to you. But I wouldn't reduce the amount of a charitable donation by the value of frequent flyer miles I received.

dweick

Did you receive those miles simply for making the charge or were the miles awarded for opening an account and charging a certain amount by a certain date? How do you divide the value of the miles between those? What if you had to open an account, make at least two transactions and spend at least $2000 and your other charge was for $1, how do you divide the miles up then? What if you proceeded to charge an additional $2000 over the next several months, was it the charitable donation or the later charges that earned you the 100K miles?

Are they probably worth $2K or maybe worth $2K or maybe turn out to have no value to you at all.

I'll echo what I said the Seth, the 100K miles might represent income to you but I wouldn't offset a charitable donation by some valuation of the miles.

Now let's go one step further, instead of using your charge card to make a $2000 donation to the charity you used it to purchase $2000 worth of $1 coins from the US Mint and donated them to the charity. Not offset to the charitable donation, right? Yet the situation is virtually the same, you used your credit card to make a charitable donation by buying coins that you then donated.

Mike1625

Let me add something to this new tax question, and please understand I am not a tax expert, this is just an opinion.

I work in college athletics, if you want to get good seats for football season tickets, you have to donate too. We tell those who donate, that their donation is only 80% tax deductible, because of the benefit the giver gets back, in terms of improved seat location.

Using my example, I don't think miles earned in a charitable contribution changes the tax ramifications of the gift, because the charity is not giving you anything in consideration for your donation. The miles are coming from a third party.

Andy2

I believe you are on the right track, and I want to add something to your analysis.

The charity provides an important letter to the donee providing the value to the consideration provided by the charitable organization (in your case, they also provide the cite of the statute that gives the 20% haircut). The IRS agent on audit is accustomed to flipping through the letter(s) to match up the deductions on the return to the "net" deduction amounts in the letter. The concept of reducing the deductions for benefits provided by third parties is somewhat alien to the IRS agent. He would have to "discover" that your credit card company even provided you with the benefit, and he/she would be constrained by the IRS ruling that, in general, the receipt of frequent flier miles / hotel points / and cashback benefits are not taxable under the "rebate theory". Most of the puchases you make on a credit card are nondeductible. Consequently, the credit card benefits you obtain from making the nondeductible purchase are not taxable. If you buy a $100 appliance and you receive a $2 cashback credit card rebate, the $2 isn't taxable, since you are in the same position as if you bought a $98 nondeductible appliance (and doesn't matter that the $2 comes from a different source than than the seller of the $100 appliance). While this example doesn't directly apply to your charitable contribution (since your contribution is tax-deductible, unlike the appliance), the IRS has indicated that, in general, the rebate rule applies to all purchases by an individual, other than transactions in lieu of interest income, for administrative convenience of taxpayers and IRS agents. In other words, if you get a 2% cashback or 25,000 frequent flier miles, from $25,000 of purchases on your credit card, you probably don't have to pick up as income the portion of your rewards attributable to the $2,000 of those purchases that were reimbursed by your employer.

Because the IRS agent is so accustomed to the "rebate" rule making the rewards nontaxable, and the agent would have difficulty valuing miles that may expire, it is unlikely (though not impossible) that he would argue that the credit card benefits attributable to the charitable contributions should reduce the deduction.

andyandy

[QUOTE=sethb;13149265]http://www.irs.gov/pub/irs-pdf/p526.pdf

Whoops, same issue wrong forum.

Astrophsx

A little off topic? There is a reason this thread is now 495 some pages long... haha

ferrariboi

AgreeD

tima1212

I ordered a few NA rolls back on December 21; the order is still in process. Are others experiencing a similar delay?

mikeef

Yup, there have been some major backlogs.

Okay, funny story for the day. Every day, I buy fruit from the stand I pass on the way to work for $.50. I give them a dollar coin and they give me two quarters in change. Today, I looked at my change and he had given me one quarter and one...dollar coin. A Susie B. Oops, apparently those things really do look like quarters.

Mike

Carl Johnson

As I understand it, the 2009 NAs, which is what you ordered, are completely sold out, so you may have a "ghost" order that will never be filled. I'd call them up and see what's going on. There are 2010's and 2001's available now, although they are backordered. So if you order some of those you will get them eventually.

Happy

I doubt that will ever get shipped. I called to cancel mine a week ago and it was canceled immediately. Though the authorization probably will still remain on my card for a couple more weeks given it is Citicard.

You may want to consider canceling it and then order the new 2010 NA instead.

ma91pmh

I've not played this game since the NA's sold out last year and then the whole affair with the mint sending out letters etc. I thought I would wait to let the dust settle.

So now I go back to the website and it very clearly states that the intended purpose of the program is to put coins into distribution and redpositing them in the bank is not part of the intended purpose. You contractually agree not to do this under the following:

"By clicking “Add to Cart” I agree that I understand, and will comply with, the intended purpose of the Program."

So in my view this program is dead, as I'm violating the terms and conditions of my contract with the Mint. So frankly mods shouldn't this thread be now closed? I mean it's game over as far as I can see. Even if people are "getting away with it" I don't think this qualifies any more as a legitimate offer.

moondog

I think you might have left out the word "immediately" when paraphrasing the intent of the program. Accordingly, perhaps the program is dead for those that immediately bring their coins to a bank, but alive and well for those that don't.

ma91pmh

Ha - of course if you are using the program to get coins to actually spend then yes I agree... but in that case I still think it's somewhat irrelevant as I can't imagine anyone ordering enough coins for actual use that would make it worthwhile. I may order a single box every now and then for use as tip money when I travel, paying road tolls etc... but this is going to be like $250 every now and then... not going to set my mileage account on fire the way my prior $5k every couple of weeks was doing