Andy2

For what it is worth, in the 1099 thread I linked to a very detailed article written by a University of Michigan law student that discusses the taxability (and nontaxability) of rewards for credit card sign-ups. There are no precise rulings on point, but I share Happy's skepticism that mileage or point bonuses would be taxable even if only one purchase is required, although no one knows for sure.

The rebate rule keeps the bonus from opening the credit card from being immediate taxable income. Instead, the items purchased with the credit card receive a lower basis. The FMV of the miles received serves to reduce the basis of the items purchased.

I think everyone agrees that the new credit card account holder who receives $500 worth of miles (a hypothetical number) for opening the account and has to purchase $2,500 of goods with the credit card isn't taxed; he just reduces the basis of his goods to $2,000.

If this same guy only has to make one purchase of $10 in order to receive his account opening bonus of $500, a purist might argue that he has taxable income. The other argument is that when this guy continues to use the card and buys another $5,000 of stuff with the card, he reduces his basis of the $5,010 of stuff to $4,510. It does not appear that any credit card issuer tracks the purchases and issues a Form 1099 when the purchases are insufficient to absorb the value (if any) of the miles awarded. Since the rebate rule uses the word "indirect", personally I think the value of the account opening bonus would reduce the basis of more than the first purchase, but that is just my opinion.

I don't think anyone has an answer to this theoretical question, so it is probably safer to use the card to make lots of purchases to utilize the rebate rule.

Happy

One more complication is, lots of CCs dont even survive the one year mark. I seriously doubt the card issuers would put in required infrastructure to track the future purchases for this theoretical taxability issue.

Honestly, I dont know why only one poster has his TYPs 1099 all wrong per his claim, while there are several posters said Citi actually is accurate in separate the TYPs earned from banking and from CC side - and their 1099's largely match their expectation of what the value might be. (They know the ballpark figures of their TYPs from the banking side.) These folks also have TYPs from CC side that are classified as "bonus" such as the flight pt turned TYPs - but so far we have not had anyone reported their flight points turned TYPs are being reported on 1099's.

infamousdx

I've had to do the same. The availability on BA.com for AA flights is just horrible/broken. Check on AA.com and then call BA to book it. Be adamant about not being charged a fee b/c their site is

UA Fan

Since the last half of last year, I have not been lucky with that.

LowFlyOver

Note the date of the roll out. I'm always skeptical with April 1. Even reliable sources can be duped leading into that date. With that said, this has all of the markings of legitimacy...just that Citi didn't want the info leaked yet:

http://www.dansdeals.com/archives/20748

CVG_Kid

I cannot speak to actual cases except to say that Scenario #2 is the case with Citi's banking bonus' and you can see that they are producing 1099s. The distinction is Citi's interpretation of the 'prize/award' provisions of the 1099 which seem to be reluctantly supported by the IRS in the article below:

http://www.latimes.com/business/la-f...1163342.column

Note that the Citi spokesman makes the distinction based on 'purchases'.

So far it seems each bank has made their own interpretation of the code; Citi's being the most impactful. I have not information about Chase issuing 1099s but it would be a concern only if they adopted the same interpretation as Citi.

myb821

+1

TorontoSingh

I called Thank You Service center today to ask about the transfer options to airlines and the rep told me herself that it's available for Singapore Airlines and British Airways with the conversion rate of 1:1. I asked for the effective day, she mentioned that according to her records, it's effective as of March 26, 2012. Strange that Citi doesn't do a better job of coordinating such an important launch with the right hand not knowing what the left is doing.

If Citi wants to be competitive against Chase Shapphire Preferred and Amerx Premier Gold Reward, they should consider adding AA miles to the Thank You reward program too, it will be their unique selling point the way United is to Chase or Delta is to Amex. Both BA and SIA are pretty lousy for most long haul international redemptions with excessive fuel surcharges and fees.

amolkold

As much as I like AA miles, if Citi were to ever make TYP transferrable to AA, I'd book an F award in a heartbeat. More miles = inflated award chart.

thetravelabstract

+1. I can confirm the same with the different Citi Reps I spoke to today. The deal is on, with Citi Reps getting info on March25/26, 1:1 ratio for BA and SQ starting some time in April.

Maybe that's all Cii TYP can get an agreement with because it is so weak. It would be interesting to see how the regular Citi AA cards would be impacted by AA transfer option.

Another intersting data point is the Affiliate ad for 30k Citi TY Rewards Premier card is being pulled this Friday (30th of March) just in time for some big news in April ? Will we see a revamped Premier card with his transfer option unveiling?

Talk Amongst yourselves.

CVG_Kid

+1

The issue I see right now is if BA/SG is the initial rollout it will virtually entice no one outside the frequent flyer community. Most folks will look at British and Singapore and think to themselves, "but I'll never fly those airlines." The primary interest will be in this community for this offering. That is why their mishandling of the Dan's Deal posting is disappointing. They really don't understand that or this community.

If they rolled with American it would be a much bigger deal for the general public. Maybe that's the delay. Let's hope so.

I wonder if they'll charge excise taxes.

CVG_Kid

Eventually perhaps but with AA in bankruptcy if I were Citi I'd be negotiating some killer deal to buy billions of miles from American at steep discounts both providing a steady revenue stream in trying times and a leg up on a 30 year relationship.

I usually redeem on OneWorld carriers anyway for longhaul premium cabin. Partner award charts are further insulation from AA inflation.

2stepsbehind

I'm not sure why people keep jamming up the ThankYou Points line to "confirm." Either they will announce this offer or they won't. If they prefer to keep the details under wraps, let them make their big splash. Have you all forgotten so quickly the debacle of last fall where Chase ended up pulling an offer after a few too many bloggers decided to share the news?

mia

Unlikely. Citi owned Diners Club International for three decades, and still operates some of the card-issuing Diners Club franchises, although they sold the Canada/USA franchise. This gives Citi mile purchasing relationships with a couple dozen airlines in multiple markets worldwide. I think it's likely that they can add most any program they want if the airline or hotel chain does not have an exclusive contractual tie to another USA based card issuer.

thetravelabstract

+1 Great Point.

I was saying maybe it is the ThankYou Rewards program itself that is the problem. Maybe it is limited by Citi for a reason. Obviously pure spec but back to man topic.

Still pumped for April to see what happens with the announcement.