I purchased 40 Inside Flyer subscriptions and received Starwood points.

The subscriptions were donated to the United Way.

From their perspective, the full $ value of my gift is deductible.

However, what about the mile benefit I received from Starwood?

Can I deduct the full value ($2400) or do I have to reduce by value of the miles?

Their perspective has no bearing on anything. Your Schedule A & Form 8283 are going to look mighty odd. You would be well-advised (although not by me) to read the instructions to the 2 above-mentioned forms and if you still think its worth it, discuss same with your competent tax professional.

Apologies to the author of this thread since I am not answering the original question, but I honesty don't understand the U.S. tax code sometimes. The United Way did not get $2400 in value from your donation, but they are perfectly willing to write you out a slip saying you donated goods valued at such. What does the United Way need more? Some frequent flier magazines or just a small percentage of the cash you spent on the magazines. Would they have preferred $100 instead of 40 subscriptions? At least with the Kelloggs cornflakes, nutrigrain bars, etc. AA miles promotion or the pudding guy's escapades, the donations to food pantries were somewhat consistent with what the recipients needed. In reality, what non profit organizations really need is CASH.

At the end of the day, this is just a tax subsidy from me to you. Ugh

There was a great article in the New York Times Sunday magazine about a year ago about the market for used clothing in Africa. A large percentage of clothing that is donated in the United States ends up in the trash or being sold in Africa and other impoverished areas of the world. Goodwill, the Salvation Army, the local church, and other charitable organizations simply have no good use for most of the clothing that is donated (they don't have the resources to warehouse all the donated used clothing), so it ends up being collected by brokers who (may) clean (yeah, a lot of clothing that is donated isn't even washed beforehand) and then sort the items before shipping them in bulk to Third World countries where they are sold (not distributed freely) as new or close to new. So that circa 1985 blazer you bought for $200 and donated to goodwill last year may end up being sold in Kampala for the equivalent of $10, or a month's wages. Goodwill probably got a couple of bucks at most for your suit while you got to claim a $100 or so charitable deduction. I love this country.


[This message has been edited by fallinasleep (edited 10-03-2002).]

Eastbay1K's advice is excellent.

This is a subject that has been beaten to death on FlyerTalk in the past, what with Kelloggs AAdvantage promotion over the past couple of years and other mileage-buying opportunities.

If this thread gets noticed, I predict that you will get the full range of responses. Competent tax advice is something worth paying for; I'd probably not take a return position based on anyone's IBB postings.

Just my .02

FWIW, I deducted the full purchase price of about $10,000 of Kelloggs products where the food was donated to the food bank and men's mission.

You donated the subscriptions to the United Way. Did you just put the local agency's mailing address on the form? I too am wondering what value these 40 subs have to that agency. (With all due respect to Randy, it is a fine publication.)

Insideflyer is absolutely a great publication.

I spoke to the United Way donation in-kind director regarding whether they would be interested in such a periodical.

They said yes. They would like to distribute it to member agencies.

They sent me a tax receipt for the value of the subscriptions based upon the receipt from Inside Flyer.

I directed Inside Flyer to mail the 40 each month, in bulk, to United Way.

While miles may not be considered taxable income in isolation (earned by flying), unless sold for cash or barter, must their value nevertheless be considered as an offset when earned as a result of a deductible transaction? That is the ultimate question, and a reasonable answer would seem to be that they must.

When you buy a subscription or book from, for example, Focus on the Family in Colorado Springs, CO, they will send you a receipt that shows the fair market value of what you bought from them, and that thus allows you to compute the value of any contribution.

By subtracting the fair market value of what you actually received from the total paid, you arrive at the deductible "donation."

In the case of recipients of donated InsideFlyer subscriptions, while the charity may issue a receipt showing the value of a "donation," they have no way of knowing what you "received" in return (the miles, since they did not provide them) nor their value.

[The same would go for cereal.]

If you are conscientious and desire to follow the law, you should subtract the fair market value of the miles received. Now there's a problem of it's own . . .

Some people may use a fairly low valuation!

Willful undervaluation of the fair market value of those miles could result in criminal or civil penalties by the IRS and various courts, but there does seem to be a lot of legitimate appraisal variability of the fair market value.

That's what accountants, tax lawyers, appraisers, frequent flyer consultants, and similar professionals are for. I am not undertaking to provide any such advice.

If you get overly aggressive, though, and get audited, the legal and professional fees in fighting the IRS may offset any "savings" in pushing the envelope too far.

Just my 2� worth.

While SPN Lifer's view is certainly reasonable (value of miles not given away should probably be subtracted), the flipside is that I tend to value what I gave away without regard to what I might have kept for myself.

The Kelloggs products cost the same with miles or without. I also kept for myself some $$ off coupons printed on the boxes - I would like to think I wouldn't have to subtract their value, too.

To me it looks like a pretty slippery slope to step on for the sake of saving very little tax money. If taking the deduction raises the possibility of an audit even a little, I for one wouldn't do it. If you've ever been autited you understand.

I am certainly not a tax pro, and wouldn't want anyone to act on my comment - but just my perception here:

If I pay someone $100 in quarters, and receive $100 in bills - and then take $50 in the bills and donate to charity - my donation is $50, not $50 minus the $50 I kept. The charity did not give me back the $50, just as this charity is not giving back the miles in exchange for the magazines.

So, whether or not one should deduct the value, or whether or not it is acceptable to the IRS, I don't know. But I don't see how the value of the miles should be taxable. They were not earned, anymore than they would have been earned if they were just purchased directly from an airline or hotel.

You are able to deduct the fair market value of the merchandise being donated to the charity.

If large dollars were in question, which usually is not the case, a modified answer could occur.

You see, the IRS would argue that the magazine only has a fair market value of $30 (???) because you are paying $30 for the points which are not given to the charity. Also, whenever a subscription is purchased, points are provided so value would be associated with that incentive. (The $30 number is just a reasonable number for my example.)

Remember, the larger the dollars involved, the more likely your position will be challenged. When challenged, most of you will fold under pressure from the auditor because you are uncomfortable with your actions and intimidated by the gov't.

Generally, it is a bad idea to make financial decisions based on tax reasons alone.

Tax is, in a way, an adversarial relationship with the arbiter at the other end. As with many legally defined interactions, there is some discretion on the part of the person making the decision. I would certainly not want to try arguing for the full tax deduction because this would necessarily presuppose ignorance on the part of the IRS representative. That person would probably not like that presupposition. They have smart people over at the Service. I'd err on the side of caution.

I ordered 4 years subscriptions to 6 different institutions -- donations-- I was charged on my diners card but got no acknowldgement from inside flyer-- i hope randy reads this-- I need to know if they are sending the magazines to ther right addresses, and i need some documentation from inside flyer so i have it to take a tax deduction -- the institutions do not know if i have given them a one year or 4 year subs.-- only inside flyer knows that-- any suggestions where to go?