Well option 1 wasn't really an option as the purchase was about 3.5x my credit limit. So I went the negative balance route. That actually took a little effort as my online bill pay only allows a maximum of $10,000 per payment...and caps the total number of payments to a particular vendor to $50,000/day. I called them up but they couldn't help make a larger payment, which I found odd. So in the end I had to make 5 payments a day for a few days...but fortunately each of the payments posted to my Amex account within a business day. The thing I was most surprised about was not getting a phone call from Amex when the actual charge was put through.

So, to be clear, you prepaid your card over a few days until your balance was negative at least $100,000 - then ran a $150,000+ charge on the card - all without ever contacting Amex, and they never even called you for suspicious activity? I think if that were me I would almost be disappointed I didn't get a phone call. Amex SHOULD be concerned about a charge that large, even if you did call in advance.

In the end, its great you were able to work it out. That many starpoints are worth the hassle.

Congrats for making it thru! I used to push major volume thru Amex, sometimes 6 digits a month but I'm in the process of transitioning to other cards... devaluation sucks :(

Yes, that's pretty much how it went down. Definitely was expecting a call and was quite surprised it never came. Charge went from pending on Tuesday to posted on Wednesday without incident. Gonna be a nice month in the Starpoint department.

Thanks. I've been diversifying my spend a bit over the last year or so (added a Chase Ink Bold) but honestly I haven't found anything that works better for my needs than the SPG Amex. I'd be happy to hear what you've transitioned to.

In the past, my spendings were almost exclusively on the SPG Amex card. However my loyalty dropped with the march devaluation, and many of the SPG hotels I visit giving themselves "category upgrades" often times with no apparent improvement in service or amenities. In addition to spg amex, this is what I have:

Capital one Spark Card - 2% cash back, but 1.3% after tax (need to pay 33% of cash back to uncle sam).

Chase united airlines explorer - >30k bonus 1 mile per dollar. spent to the bonus limit and idled this card.

Chase united airlines club (1.5 miles per dollar). And here, is where most of my spendings go.

I'm still putting enough to get around 250k starpoints a year because there is still some benefit to spg amex but its a small amount compared to the other cards. From a business perspective, you'd get in trouble if you expense a week in Maui (whereas in Shanghai its just fine) so might as well use Starpoints for that haha.

Really? Is the 2% treated as income, rather than a discount? Are your numbers on that card huge, and does CapOne send a 1099?

http://www.capitalone.com/business-c...-cash-rewards/

It's a business card. Cash back with respect to business (not personal) activity that's deductible either yields taxable income or an offset to the business deduction.

Yup.... if you pay an expense with a business card and the expense is 2% less (due to cash back), your profit is higher, and this needs to be reported on your statements.

But if it were fringe benefits (giving free hotel rooms + flying me places on award ticket = vacation), its generally not a requirement to report this. I don't think a client needs to think about reporting to the tax authority that they are getting "wined and dined" although with this government, you'd never know ;)

Exactly correct (at least in the USA). In 2002, the IRS issued Announcement 2002-18 (which you can view at www.irs.gov/pub/irs-drop/a-02-18.pdf). This announcement is still IRS policy:


[The] IRS has not pursued a tax enforcement program with respect to promotional benefits such as frequent flyer miles.

Consistent with prior practice, the IRS will not assert that any taxpayer has understated his federal tax liability by reason of the receipt or personal use of frequent flyer miles or other in-kind promotional benefits attributable to the taxpayer’s business or official travel. Any future guidance on the taxability of these benefits will be applied prospectively.

This relief does not apply to travel or other promotional benefits that are converted to cash, to compensation that is paid in the form of travel or other promotional benefits, or in other circumstances where these benefits are used for tax avoidance purposes.

For business rewards credit cards, this policy give mileage and hotel bonus points credit cards an edge over cash rebate credit cards.

This makes me wonder how the IRS would view a currency like UR - which may be readily converted to cash, but which most of us here use for travel through transfer to loyalty programs. The phrase "This relief does not apply to travel or other promotional benefits that are converted to cash" would put the taxpayer in an odd situation where they may have to report some of their points (if they get cash back) but not others (which were transferred to UA, for example). Most obviously, it makes me wonder how the IRS would treat a UR statement credit used toward a travel purchase. Is a statement credit "converted to cash"?

Also, the phrase "attributable to the taxpayer’s business or official travel" makes me wonder if the IRS might try to limit this guidance to BIS miles only.

Far as business expense goes, if your statement is reduced by X amount, that means its "converted to cash". But again, if those of us are buying things using post tax income, the fact that you get a cash back (i.e. discount) doesn't change tax position at all... so redeem anything want with UR.

On the subject of UR from a business perspective, its much better to redeem it for gift cards than cash :)

So YMMV depending on what position you are swiping your cards from. For me, 2% cash back card = 1.3% net cash back, which is not as good as the 1.5-2 cents that each starpoint is worth, or even the 1.5 miles (worth 2-2.5 cents) that a United Chase Visa gives.

I doubt it. At the time this announcement was published, airline and hotel rewards credit cards were uncommon. But the main reason why the IRS chose not to tax miles and points back then was the difficulty of valuing them. And because IRS employees have been able to keep the miles they earn on official travel since 2000 (by law), you can probably guess why it was so important for the IRS to put out this announcement in 2002. ;)

The valuation issue still applies to all miles and points regardless of how they were earned. It does not apply to the receipt of a cash rebate - obviously.

If I cancel the AMEX card, do I lost the 2 stays / 5 nights credit that I received with it?
Or once it's in my SPG account, it can't be clawed back?

Here is what I got the other day:


Response (Praveen Shrivastava) 04/30/2013 10:28 PM
Dear Michael,

Please refer to my earlier email of 01/29/13.

I wish to inform you that our research team has completed its investigation.

As per their research, you have been identified as an existing Cardmember so were redirected to the offer available to existing Cardmembers.

Our Compliance Team has confirmed that your experience did communicate the 10,000 First Purchase Bonus offer (even if you originally viewed the Prospect offer and are complaining because this is not the offer you eventually applied for). Therefore, they are not able to honor your claim.

As per their research, you were eligible for POID AB80:0001. Under this offer you were eligible for 10,000 bonus StarPoints on making the first purchase. These bonus points have already been transferred to your account on 06/10/12. As such, no further action is required.

I hope you find this information useful. If there is any other way we may be of assistance, please contact us.

Sincerely,

Praveen Shrivastava
Email Servicing Team
American Express Interactive Services


Oh well. Looks like I will be canceling the card.