Tomorrow I will go to Costco to purchase enough NutriGrain product to redeem 100K through the AAdvantage/Kelloggs promotion. I think I have covered all my bases:
-2 calls to AAdvantage to insure there is no cap on mileage earned in this promo
-Another call to AAdvantage reserving award travel later this year
-calculated the cost of these miles at .0173 cents per mile
-discussed the donation of all of the food product with my CPA and was assured the entire purchase amount is deductible, thereby lowering my cost per mile to approx. .012 cents per mile

I have consciously not counted the value of my time cutting and filling out 1000 cardboard certificates - I guess a custom sticker would help.

I've been bitten by the FT bug!

You know, many people (including myself) have been throwing this idea around, calculating the costs per mile, etc... but I think you are the first person here to actually do it (I may be wrong). I tell friends about this idea and they think I'm whacko. So will the girl at the check out line at Costco. But, no matter how crazy people think you are, donating the food to a shelter or such is certainly a fantastic thing to do... not crazy at all.

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preez mine da pratform gahp.

oops.


[This message has been edited by LIH Prem (edited 02-18-2001).]

flytoeat (or should you call yourself 'eattofly'), be sure you make photocopies of all certificates, coupons, etc. just in case AA misfiles your redemptions.

Make us proud!

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He who dies with the most miles ... is dead.

Flytoeat,

Sounds great... but a question. If you take a deduction for your charity contribution, wont you also have to declare the "retail" value of the 100K miles?

According to my accountant - when I thought about this - that was his quick response. I did not follow-up.

Just wondering.

William

WHARVEY:

My CPA told me I do not have any liability for FF miles. The acid test is that the boxes containing the certificates are no more expensive than the ones without them. I am purchasing one box without the certificates to document. This CPA is aggressive but has not steered me wrong yet.

Where do you live? I might see you at the local Costco !! Make sure they are open on Presidents Day (the Costco near me is often closed on Memorial Day and 4th of July). Also make sure that Kelloggs would accept the order forms with a pre-made label (use an old address sticker label) if you decide to go that way.
Last year, I did a similar promo, not quite as lucrative, but got Delta points for buying Diet Coke products at my local supermarket. Needed 6,700 points for 25,000 Delta miles. Each 2 liter bottle of Diet Coke was 50 points. There were some multiple purchase bonuses. Anyway, the total cost for my 25,000 Delta points was around $180, plus I got all that soda. Cashiers let me sneak through some Cokes, Sprite and Orange so I wouldn't be stuck with all Diet. Did end up donating lots to the local schools every time they had a Bingo Night or fundraiser. But you should have seen the piles of soda in my basement !!!
GOOD LUCK !!!

I have been sending in about 2000 a month since this started and I use an address stamp. I only have to write in my AA acount number. So far they have posted all my miles. By the way I take the nutrigrain bars to work and they guys love me. They are looking forward to the pop tarts next week. One of them promiced to bring a toaster. Good luck on the 1K

Flytoeat, sounds like a winning idea to me. If your net cost for the 100,000 miles is about $1200.00 and you get a First Class ticket to an international destination (worth in the neighborhood of $10,000 or more), you have gotten a great deal!
(I would send those certificates FEDEX or certified).

Does the cost per mile equal out to 1.73 cents or .0173 cents per mile?

You do not have to "declare" (in IRS terminology, declare generally means to include as income) the retail value of the miles since you have in effect paid for them when you purchased the Nutrigrain.

The correct procedure the IRS would want you to follow is you must assign a "cost basis" to the miles and subtract this amount from your Nutrigrain purchase price to arrive at the amount of your charitable deduction.

Generally, you determine how much of the total purchase price to assign to each item (miles certificates or Nutrigrain bars) as its respective cost basis by multiplying the total purchase price by a ratio, with the the combined fair market values of the items as the denominator, and each item's specific fair market value as the numerator. This is the theory.

But in reality, we would of course use the fair market value of the miles not in their high value as being redeemed for high value awards (F/J tickets or upgrades), or for that matter, not valued as an award at all since the value of an award ticket fluctuates depending on thecircumstances.

We would instead value them by how much it costs us to aquire them via other methods. And we all know that when we perform our super duper bonus miles mileage runs, after we subtract the value of actually having gone somewhere, the cost per mile is really really low.



[This message has been edited by onedog (edited 02-18-2001).]

Good point John, my decimal was wrong. The cost per mile is 1.73 cents, or 1.20 cents after tax.

Pudding Guy Wannabee,

You still have some work to do. I believe that the orignal Pudding Guy spent something like 1/7th the cost per mile as you did (give or take)? You did very well, but this is not a screaming deal. I'd rather spend a little more money per mile and go on a mileage run and visit a new city. Though with some of the current internet fares you can potentially pay less per mile on a mileage run.

Despite that, your generosity to local charities is heartening, and I hope that more people follow your example.

Trying to figure this out...

Even if you pay $2.00 a box for 100 miles, that's $20 for 1000 miles.

And $200 for 10000.

So at the 2 cents a mile conversion rate, you broke even.
I figure that $500 = 25,000 miles. Now if you use those miles to upgrade...

Dan

The "Pudding Guy Wannabe" header is made in jest, although with some truth. My motivation in doing this is to fly my family together in first class to Hawaii around the holidays. For less than the outlay for coach tickets, I can achieve this and donate at the same time. I do not fly enough to accomplish this otherwise (am only elite in one program). I'm taking a break from tearing open 1000 boxes and cutting out the coupons. This must be a hobby because I couldn't justify my effective hourly rate.