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Airline Tickets Redeemed with Points Held Taxable

Saul Brenner, CPA, J.D., LL.M. 09.29.2014 | eVisor

The Tax Court has agreed with the IRS in its attempt to tax an airline ticket redeemed with “Thank You Points” issued when opening a Citibank account1.

In 2012, Citibank began to issue 1099-MISC forms to customers who received frequent flyer miles via its Thank You Points promotion for opening an account. This would make those customers responsible for paying the taxes. 

Not all banks agreed with Citibank’s position and the IRS had, in the past, not established any enforcement program targeting frequent flyer miles.  But, change may be in the wind. The recent Tax Court decision held that the petitioners “must include in their gross income the value of the airline ticket received in redemption of 'thank you' award points.”

1 143 T.C. No. 5 Parimal H. Shankar and Malti S. Trivedi, Petitioners v. Commissioner of Internal Revenue, Respondent. Docket No. 24414-12, 8.26.14

Questions? Contact your Berdon advisor or Saul Brenner at 212.331.7630 or sbrenner@berdonllp.com.

 

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