donating miles (US) IRS deductable?
 

Hi, my wife just donated 10,000 miles to the make a wish foundation through the USAirways dividend mileage page. Considering this is a recognized charitable organization - does anyone know if this type of charitable donation is IRS compliant for deduction? I figured that since US once wanted to charge me 3.5cents per mile to upsell and award that might be a recognized methodology to calculate reasonable assessed value of mileage donation? anyone have info?:confused:

This has been discussed before.

Since you paid nothing when you got the miles... ie. the airfare was not increased because you got miles, you cannot easily deduct the value when you donate.

You cannot use a value of what the ticket/miles would have cost.

If, however, the IRS taxed FF miles it would be a different story... but we do NOT want that!!!!

There may be threads on this in the USENET group misc.taxes.moderated. Use your news reader or try http://groups.google.com/group/misc....ated?lnk=gschg

If one could claim a deduction (you can't), and 3.5 cpm were considered fair market value (it isn't), then those in a 40% tax bracket, which isn't hard to reach, would net 1.4 cpm donated and many would be dumping lots of miles to charities (which they aren't).

The IRS will charge you when you're given miles (see the AA sweepstakes winner), but won't let you deduct them we you give them away.

It's better for most people to keep the miles and use them for personal travel, and give the charity money, which nets a deduction. If you keep the money, use it for tickets, and give the miles, no deduction.

This same issue was raised last year. The consensus, and my opinion, is that the most you could deduct is your basis which is zero in most cases. On the other hand, if you do have some miles for which you've paid $$$, then those miles do have a basis and you could deduct them.

If you give away the miles you've won and paid taxes on, the IRS would probably agree to allow you to claim a deduction of the amount of tax you paid for them.

I would be a lot happier if the IRS didn't even know that there was such a thing as miles.

Please don't remind them.

If we don't want the IRS to put a value to miles for taxation purposes, we shouldn't try to put a value to them ourselves for deduction purposes. Let's not step on that hornet's nest.

absolutely
 

When we donate tickets to a non-profit organization we buy them. No question then.

My inexpert opinion on the tax questions:

Agreed, "basis" is a key concept here.

If you won redeemable miles as that fellow did the 1M AA miles, accepted them and paid $Y taxes on the $X AA said they were worth (which that fellow quite understandably didn't want to do), and then donated the miles to a qualified charity, then I think you could claim a deduction for a contribution worth $X, which will be substantially greater than $Y. And in the end the effect will be a wash, with the miles in the hands of the charity for whatever use they would make of them.

(The interesting question is if the charity immediately turns around and auctions the miles, getting $3X for them, can the donor of those miles then claim a deduction for a donation of $3x. If the miles in reality were worth no more than $1X when auctioned and the purchaser was in effect making his/her own gift to the charity of the extra $2X, will that purchaser rather than the original donor be entitled to take the deduction of a $2x contribution on his/her tax return. For sure, both the donor and the purchaser cannot be entitled to the $2X as a charitable gift deduction.)

If miles seem a little "funky," as they might, then substitute a valuable oil painting that someone wins in a drawing, pays taxes on, and then turns around and donates to their alma mater, which hangs the painting on its walls for a few years before selling it off and putting the monies into its endowment fund. Same answer(s)/result(s).

Put a value to them or don't put a value to them, it won't be "we" stepping on any hornet's nest. The individual donor's deduction will either be allowed or denied, that is if the IRS takes any note of it, but I am quite confident it won't precipitate consequences for anyone but the individual taxpayer, if indeed it does for him/her.

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