Ask the lawyers: Miles and Mileage Programs
Oct 23, 2007, 2:01 am
#76
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What is that? It looks to be part of 104 H.R. 3111, which never passed the House in 1996. See http://thomas.loc.gov/cgi-bin/bdquer...4:HR03111:@@@X
The current 26 U.S.C., Section 137 has nothing to do with frequent flyer miles. See http://uscode.house.gov/search/criteria.shtml
The current 26 U.S.C., Section 137 has nothing to do with frequent flyer miles. See http://uscode.house.gov/search/criteria.shtml
Cheers.
Oct 23, 2007, 10:22 am
#77
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...There have been precedents where the employer asks you to use your miles for a business trip and they'll "purchase" miles from you. It doesn't matter weather you got the miles from personal or business, the IRS treats the mileage as a "rebate" with a 0 cost basis. You will be required to pay regular income tax on the amount of the "Sale" (i.e. FMV) and report that as income. You cannot deduct the cost of the miles as the basis is 0. You cannot argue that the basis is NOT 0 unless you purchased directly (i.e. via airline), as the policy is shown by the IRS charging income tax on the full amount on the sale. The company can then deduct the purchased amount as a business expense....
Oct 23, 2007, 10:34 am
#78
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We're discussing deductibility when the benefit was the result of a personal, not trade or business, purchase.
Oct 23, 2007, 10:36 am
#79
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Would you say that one share of Microsoft stock is the same as one share of Microsoft stock? But if I sell the first one, I owe $20 in income tax; if I sell the second one, I owe $0 in income tax.
Oct 23, 2007, 12:02 pm
#80
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Indeed, they usually do. Even where a manufacturer establishes a uniform retail price, there are still differences in sales taxes and delivery charges. The fact that the basis can be different for identical miles has no relevance in this discussion.
Oct 27, 2007, 2:02 pm
#82
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Oct 31, 2007, 11:15 am
#84
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Nov 13, 2007, 7:25 pm
#85
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Sorry for the delay...
Sorry, I had a slight timing problem...I will try to give an overview here and post a more detailed analysis later on today. Generally, we have noticed a difference of opinion (now, thats no surprise, since lawyers were debating
) amongst the legal systems. At the extreme end was our panelist from Hong Kong, who felt that in HK, the airlines essentially could do whatever they pleased to do. At the other end, the European panelists felt that the terms and conditions would be subject to the European Unfair Terms and Conditions Directive, thus posing some "border". What remained an issue were "bought" miles: while all panelists agreed that the airline could devaluate miles, and even forfeit them ( I was the only one disagreeing, so you may not want to follow me on this one), they felt that if a customer had spent actual money for the miles, he had more rights.
One panelist reported of taking a British carrier - one that is not part of *alliance - to court for not making flights available. The carrier fought to have the matter removed from small claims, thus exposing our dear panelist to full cost risk - easily a high 4 to low 5 figure Pound amount - so he had to withdraw. BUT, this shows clearly, that carriers are well aware of the risks and do not want to risk a judgement.
As to the issue of ownership in employment relationships, all agreed that there is a primacy of the contract: if the contract stipulates that the miles are accrued for business usage, then this must be adhered to. Most also agreed that even in absence of such contractual rules, the economic benefit of the miles should rest with the person paying - if he can use them. Thus, if the T&C's stipulate that only the person holding the account may redeem miles, then the miles are his. However, he may be asked to use the miles for business related travel.
Now, I need to check in now and will be back in a few minutes.
) amongst the legal systems. At the extreme end was our panelist from Hong Kong, who felt that in HK, the airlines essentially could do whatever they pleased to do. At the other end, the European panelists felt that the terms and conditions would be subject to the European Unfair Terms and Conditions Directive, thus posing some "border". What remained an issue were "bought" miles: while all panelists agreed that the airline could devaluate miles, and even forfeit them ( I was the only one disagreeing, so you may not want to follow me on this one), they felt that if a customer had spent actual money for the miles, he had more rights.One panelist reported of taking a British carrier - one that is not part of *alliance - to court for not making flights available. The carrier fought to have the matter removed from small claims, thus exposing our dear panelist to full cost risk - easily a high 4 to low 5 figure Pound amount - so he had to withdraw. BUT, this shows clearly, that carriers are well aware of the risks and do not want to risk a judgement.
As to the issue of ownership in employment relationships, all agreed that there is a primacy of the contract: if the contract stipulates that the miles are accrued for business usage, then this must be adhered to. Most also agreed that even in absence of such contractual rules, the economic benefit of the miles should rest with the person paying - if he can use them. Thus, if the T&C's stipulate that only the person holding the account may redeem miles, then the miles are his. However, he may be asked to use the miles for business related travel.
Now, I need to check in now and will be back in a few minutes.
Nov 13, 2007, 7:33 pm
#86
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Thanks for getting back to us!!!
Here's a related question I thought of recently: What protection does a corporate purchase of miles have? Amex bought billions of miles from Delta at the time of Delta's bankruptcy. Does Amex have a claim against Delta for devaluing those miles, for example by imposing capacity controls on its formerly unrestricted double mileage awards?
Here's a related question I thought of recently: What protection does a corporate purchase of miles have? Amex bought billions of miles from Delta at the time of Delta's bankruptcy. Does Amex have a claim against Delta for devaluing those miles, for example by imposing capacity controls on its formerly unrestricted double mileage awards?
Nov 30, 2007, 2:41 pm
#87
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Did you have a chance to consider the use of personal miles for business expenses under USA tax law, or was that too narrow of a question for your international conference?
Dec 1, 2007, 10:36 am
#88
Join Date: May 1998
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. . . while all panelists agreed that the airline could devaluate miles, and even forfeit them ( I was the only one disagreeing, so you may not want to follow me on this one), they felt that if a customer had spent actual money for the miles, he had more rights.
I would think in common law whether the consideration was in cash or in action (flying the particular carrier) would make little difference, except in computing the measure of damages for breach (presuming breach was found).