yoyo

management consulting company. Employees typically do a lot of traveling.

yoyo

Its take it or leave it so no option for negotiation.

yoyo

Exactly what I was thinking.

Out of my Element

This is likely correct. Gross income will be increased to reflect the $980. Employer will have to cover their share of taxes, but it will raise income for OP. Seems like a good deal.

hhoope01

You should be able to contest the points valuation with the IRS. There was a thread a number of years back, may have been in the OMNI forum though, I think where someone mentioned doing this. They just took screen shots of the price of what it would cost them if they were paying cash and used that as the actual cash basis when preparing their tax forms. I don't think it is hard or complex to revalue the points the main thing is you will want a way to prove your valuation: https://www.thebalanceeveryday.com/h...s-taxes-897038

Even though this is an employer and probably being added to your normal pay rather than a 3rd party sweepstakes win, I'd guess the process would be similar.

pinniped

The threads about contesting valuation are usually done when the sweepstakes organizer attempts to claim an unrealistic valuation on a large prize. You win 1 million miles, get a 1099 for $30,000 - *now* it's worth the time and effort to contest the value with the IRS.

OP's employer isn't trying to do him dirty - 0.8c is fair for Bonvoy. He's on this forum, he has Gold status, so we can assume that he knows at least a little bit about Marriott and could use a hotel room in the next year or so. I'd take the points and enjoy it.

Adam Smith

But what's the basis for disputing the valuation? The valuation being proposed by the OP's employer is below Marriott's standard price (1.25 cents), slightly below the lowest price offered this year (0.825 cents) and barely above the lowest price in the past 6 months (0.78 cents).

It's possible to obtain miles more cheaply though a CC sign-up bonus if you only look at the annual fee, but the IRS would likely argue that's not a comparable transaction (and therefore not representative of fair market value) since it requires being approved for the card and spending thousands of dollars on the card.

I don't see what market data the OP could use to justify a lower valuation than what the employer is indicating.

TravelerMSY

It may be possible, but I doubt the OP would want to fool with extra IRS scrutiny over the ~$150 he’d save if he successfully argued a .4 valuation instead of .8. But this is FT so we’ve got to sit around and debate it

hhoope01

What I would do would be to capture the cheapest cash price for the room type I reserve using those points. If the "value" is above what his company is valuing the points at, I'd not do anything. If the value is below what the company says the value is, I'd do a screen print showing the dates, the cash rates for the rooms and keep a copy of my actual reservation using the points. Then when doing my taxes, I'd use that valuation. For example, if I were to use the points for award that values the points at $.006 per point, then I'd use that to get the taxable value.

I'd never use the valuation of what it might cost me to purchase those points as I didn't purchase them. I'd use what "value" I received when actually using the points and then decide if it is worth updating my taxes. And compare to what you actually reserved, not including any "upgrades" or other elite benefits the hotel might give you. And of course, I'm definitely not a tax accountant, don't play one on TV, and didn't sleep at a Holiday Inn Express last night. So don't take my interpretations of anything as definitive.

Everyone values their own time differently and have their own situations. So that $150 could mean a lot to some or next nothing to someone else. I'll leave that valuation to OP to decide if the effort is worth it or not.

pinniped

If one were so inclined, they could demonstrate a terribly low value for Bonvoy points. Just find a Florida hotel room during hurricane season. The points rate will probably be stupid-high and the cash rate pretty low. Start with a Sunday night 1-night stay.

You could probably do this with a lot of seasonal locations. In theory the hotel could have a bit lower off-peak award but they often don't.

MSPeconomist

I think the idea is to look at what it would have cost to pay for the reservation the OP uses, not find some random hotel somewhere and random date for the calculation.

pinniped

The IRS is going to see this as taxable in 2021 - perhaps well before any reservation is made.

(To be clear, I think OP should accept the 0.8 as fair...the juice isn't worth the squeeze to do anything else.)

Adam Smith

The term in question here is "fair market value" (what a buyer and seller would willingly agree to in the marketplace), not "worst possible value you could find anywhere". You (or the OP) would be free to make whatever arguments you wanted, but I highly doubt that this approach would be successful.

DELee

Yup. Management. Just avoid Ben Dover.

David

Mr. BoH

I disagree with every part of this. Marginal rate is the appropriate rate to consider for this decision of whether or not to take the points, because they will be taxed at the marginal rate. Effective rate is irrelevant for this purpose.

Also, hiring a professional doesn't magically change your tax situation. If you get your income from "simple" sources and you know what you are doing, you will get just as good of an outcome doing taxes yourself (and save on tax prep fees).