Jesperss

It's ironic that when people actually use their miles they'll brag how they saved $14,000 on a flight using miles but yet in this thread are arguing that the miles aren't worth 2.5 cents a mile.

That being said they should be valued at 1 cent / mile.

ss

Only $25,000? You were thinking small, my friend. ;-)

Andy2

Can you let us know if it was a 1099-MISC or a 1099-INT. The minimum for 1099-INT is only $10, and at least one of the mileage bonus offers was for a type of account generating 1099-INTs.

pinniped

The people who can semi-legitimately claim they've "saved" $14,000 on a flight (e.g., the people who regularly pay for int'l F for personal trips with their own money) aren't the people on this thread claiming that miles aren't worth anything.

Andy2

Reply to SS thread, above:

Unfortunately, that was all I could get them to approve the charge for each month, which was still above my credit line for my Citi AA card. Again with the love/hate thing, there was a cool Citi rep. near Cincinnati that would quarterback each account opening with the credit card. I think he was as disappointed as I was when Citi stopped allowing the opening of accounts with a credit card (or limited it to a max of five). I wondered if he got a commission based on the size of the initial deposit (or was using his credit card to open his own accounts).

Counsellor

Amazingly, Mark Steyn just mentioned these 1099s on the Rush Limbaugh Show as an example of government overreaching on taxation.

Andy2

But don't you think the valid concerns factor into quantifying a valid discount to the fair market value of miles? Throughout tax and other areas of law, uncertainty as to whether and when something can be converted to a cash equivalent causes a reduction of value? Also, size matters. 23,500 miles will get you one-way from Chicago to Witchita on a regional jet, with a Greyhound bus trip back. 200,000 will get someone to Europe and back in business class, yet we act like the cent-per-mile value is the same whether the recipient got 23,500 versus 200,000.

pinniped

That's a good point...and here the discounting isn't just a simple expected ROI - it's risk that the program will make a change that impacts your desired reward before you can redeem it.

I generally don't think much about discounting my own internal valuation on my miles. I figure the mile I earn today will be used as a completed award flight within 1-2 years, max. If a big change is announced with at least a few weeks' notice, I can usually get out of the program with "old" awards. But still, it's that risk of change that always has me a bit concerned. I don't really expect the full termination of FFP's like we were discussing a few posts earlier, but I can easily see either (a) U.S. carriers adding junk fees to awards like European carriers do or (b) the best awards jumping in mileage cost as they've already done to some extent.

Ironically, the simple 25k domestic award probably won't change because it's so ingrained in marketing. Airlines can simply do stealth devaluation here through capacity controls.

JATR4

For those of you who think you own your AA miles, you DON'T!!!

Here is a direct quote from the AA T&Cs:

"...Accrued mileage credit and award tickets do not constitute property of the member..."

If you don't own the miles how can Citi issue a 1099 for the miles? I think Citi is run by a bunch of idiots who can't read. If they coulod they would know what the IRS 2002-18 said. The IRS has no qualms if the miles are valued at zero.

Here is an example of what the IRS would face in valuing AA miles (similar problems with other programs).

Assume in 2011 that you opened a Citi bank account and received 25,000 AA miles from Citi. You also took a trip around the world and paid cash for that trip. You received 25,000 AA miles for that trip from American Airlines. You now have 50,000 miles in your account but you only received a 1099-MISC for $625 from Citi. No other 1099s received. What is the value of the other miles in your account? That value is zero because the miles received for that trip around the world is a discount on the cash price you paid for the ticket. So you now have a mileage account with 50,000 miles and they are valued at...

That is just one of many reasons that the IRS doesn't want to get into a valuation of airline miles.

Citi is the culprit in that 1099-MISCs should never have been issued. Probably some idiot who was unfamiliar with IRS 2002-18 started this and it has snowballed.

I personally would dispute any 1099-MISC received from Citi. I would call Citi and the IRS as mentioned above. Attach a copy of IRS 2002-18 to my tax return along with a copy of the T&Cs that states that you don't own the miles and cannot sell or barter them.

I don't think the IRS wants to deal with airline miles much the same as Congress just punted on SOPA/PIPA. Airline miles valuation is a can of worms.

Easy for me to say since I don't have a 1099-MISC from Citi.

pinniped

On that, I think we can all agree! @:-)

JATR4

Added contentAA miles have already been discounted. I used some miles for hotels at the Omni in Tucson and the Hyatt Gainey Ranch in Scottsdale just over a week ago. Those same rooms now cost almost 35% more in miles. I was looking for rooms in Hilton Head and the price in miles went from 15,500 to 22,500. I mentioned in a previous post about a trip to San Diego now being 100,000 AA miles whereas in the past it has been 25,000 AA miles. This since the bankruptcy filing.

AA miles are taking a real beating.

pinniped

Maybe I'm too cynical, but I always assume that using air miles for hotel rooms (or hotel points for airline flights) is going to be a really raw deal all around.

But that's somewhat off-topic for this thread...

TroyMcClure

just checked and its a 1099-int

JATR4

Not if you are traveling from GSO (Greensboro). The earliest flight to DFW is now 1230 instead of 0600. Not really convenient unless you want to fly to Miami and then to DFW. And GSO could be eliminated in the bankruptcy proceedings. Add the fact that I am getting miles fron BankDirect and free rooms makes a lot of sense.

I posted where a flight to SAN through DFW was now 100,00 miles. Rooms are a bargain with AA miles when compared to a 100,000 mile coach ticket which only costs $411.

That is how I valued AA miles at 0.4 cpm.

allanfan

What promotion did you participate? why does it only generate 5K miles?