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If Frequent Flyer Miles are donated to a charitable organization, is it possible to deduct the gift on one's taxes? How does one figure the value of donated miles?
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I would say that frequent flyer miles are a valuable asset. I know that I pay taxes on the value of a trip that I take using them. So, I would say that making a charitable contribution of them would be deductible to the same extent any other asset is. Some airlines restrict the transfer of these miles so check with them first. I believe that there are several organizations that utilize these miles for medical flights or flights for dying children. A web search might find them. A look at the appropriate airlines website may reveal a link.

I would value them by determining the ticket that can be purchased. It is easy for me I just find the cost of a ticket to my destination. If you can get a ticket anywhere in the continental US for thirty thousand miles. An airline website would them be consulted for the cost of a ticket that would be either the most expensive or the most enjoyable or most visited.

Regards
Pat
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I would say that frequent flyer miles are a valuable asset. I know that I pay taxes on the value of a trip that I take using them. So, I would say that making a charitable contribution of them would be deductible...

I think this is dead wrong. This is from FrequentFlier.com

Can I get a tax deduction for donating my frequent flyer miles to a charity?

Answer

In a word: No.

As a policy matter, for tax purposes, frequent flyer miles have never attained the status of "property." And as a practical matter, the valuation of miles remains a notoriously inexact science. So the IRS simply ruled them non-deductible.


Ok, I haven't found an IRS document that specifically says you can't take a charitable deduction - but I absolutely believe it exists. And it's naive at best to suggest that you can value a contribution by looking up a fare. (To say nothing of the fact that Southwest miles would be inherently more valuable than, say, USAirways miles...)

Lorenzo
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If Frequent Flyer Miles are donated to a charitable organization, is it possible to deduct the gift on one's taxes? How does one figure the value of donated miles?

Why bother figuring the value when your donation is deductible only in the amount of your basis, which is zero? There's no deduction here. You can read tons of discussion if you go to Google groups and search in the group misc.taxes.moderated.

Phil
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Why bother figuring the value when your donation is deductible only in the amount of your basis, which is zero? There's no deduction here.

While I know there's no deduction now, it would seem reasonable that one should be available for the cost of buying the miles which many programs allow.

My opinion only and nothing to do with the current tax code :)

rad
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While I know there's no deduction now, it would seem reasonable that one should be available for the cost of buying the miles which many programs allow.

If I were silly enough to buy miles to donate (why not just give the $$ donation to the charity?), I'd take a deduction.

Phil
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If I were silly enough to buy miles to donate (why not just give the $$ donation to the charity?), I'd take a deduction.

I don't think anyone was suggesting buying miles and then donating them to charity. That would be silly. But some frequent flier programs let you buy miles. If, for example, you need 25,000 miles to get a certain kind of ticket and you have only 21,000, you can buy the needed 4,000 miles. If you do that and then don't use the miles, for whatever reason, you then have a non-zero basis and could deduct the purchase amount if you donate the miles.

Lorenzo
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The airlines themselves place a value on FF Miles. If they had no value, then they wouldn't be a liability for them. The figure that I've seen offered is $.02/FF Mile. If the airlines value the FF Mile at that level, you may be able to do the same.

It takes the subjectivity out of the equation (e.g., I believe I can deduct $5,000 for the 10,000 miles because that is the highest fare I could find on the internet to get to China).

My advice is to call one of the airlines' FF programs; they have likely fielded this question. And since many of them encourage members to donate miles to causes that they support (like United does for the Olympic team), they should be able to find out for you.

BBQ
who is not an accountant but flys way too often
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The airlines themselves place a value on FF Miles. If they had no value, then they wouldn't be a liability for them. The figure that I've seen offered is $.02/FF Mile. If the airlines value the FF Mile at that level, you may be able to do the same.

Sorry, it doesn't work that way. FF miles have no basis in your hands (unless you have paid for them). Therefore, no deduction. It doesn't matter how the airline accounts for them on its books.

Ira
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I would argue that one has a basis greater than zero in frequent flyer miles. It is included in the price of the tickets that one buys to earn the frequent flyer miles. Now, it may be very difficult or impossible to determine that basis, but, clearly it is not zero!

t
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My advice is to call one of the airlines ... they should be able to find out for you.

Why would you want to take tax advice from an airline? It doesn't matter what value airlines place on miles - what counts is what the IRS thinks, and they think the value is zero...

Lorenzo

P.S. See Delta's web site. They've answered the question for you - they clearly state that donated miles are not tax deductible:

http://www.delta.com/skymiles/use/donate/index.jsp

and see the Note near the bottom of that page.
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I would argue that one has a basis greater than zero in frequent flyer miles.

Make all the arguments you want, it doesn't change the fact that the IRS considers you to have no basis in your frequent flyer miles, and therefore you have no deduction.

End of story.

--Peter
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If I were silly enough to buy miles to donate (why not just give the $$ donation to the charity?), I'd take a deduction.

As the posters following you clarified - I was merely suggesting that IF one could assign a value to the miles, it would be the price the miles would cost if one were to buy them.

I know they are not deductible if donated. I was suggesting a way to handle it if they ever would be.

rad
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Why would you want to take tax advice from an airline? It doesn't matter what value airlines place on miles - what counts is what the IRS thinks, and they think the value is zero...

Lorenzo

P.S. See Delta's web site. They've answered the question for you - they clearly state that donated miles are not tax deductible


Umm, not to be sarcastic, but isn't that what you just did? If you don't consider the airline to be a tax authority, why bother going to their web site when you're looking for the IRS position?

Even though we can ALL agree that airlines don't qualify as tax advice experts, they have fielded the question before, so it isn't the worst place to start.
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On the other side of the coin, then, do I have to pay taxes on a trip I take using the miles? I always valued them and paid the tax in the past.

Regards
Pat
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On the other side of the coin, then, do I have to pay taxes on a trip I take using the miles? I always valued them and paid the tax in the past.

What tax is that? It certainly isn't income.

Ira
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What tax is that? It certainly isn't income.

My sentiments exactly. I have used my FF miles and never paid tax. I consider the FF miles a discount on future trips.

Donna
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What tax is that? It certainly isn't income.

What if you gain the miles on travel paid for by your employer?

- Megan
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I had a site saved where you could sell FF miles. I lost the site when I had to wipe out my hard drive.

I have lots of miles that are frustrating to try to use. About once a year through negligence, I pay a few days late and incur heavy charges, plus I pay $70 per year for the card. (Right there I could BUY a ticket.)

I'd rather just bargain shop for rates.

Anyone know of a reputable place (site) to sell miles?

Thanks
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Anyone know of a reputable place (site) to sell miles?

No, but if you do sell the miles, the income is taxable (other income line 21 (2003, line numbers may change), not subject to self-employment tax).

Ira

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Hi Ira,

I considered the flight a gift from the airline and the hotel room cost a gift from the hotel chain and included it in my income taxes. Whatever you consider it there was value recieved by me.

Regards
Pat
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I considered the flight a gift from the airline and the hotel room cost a gift from the hotel chain and included it in my income taxes. Whatever you consider it there was value recieved by me.

How did you value them... at full coach fare and standard rack rates or at the discounted rates that most people would pay for them?

I'm sure your Uncle Sam is grateful for your generosity. These are not reportable income.

Ira
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I considered the flight a gift from the airline and the hotel room cost a gift from the hotel chain and included it in my income taxes.

Gifts are not taxable income. Sometimes, the giver (but not the recipient) might have to pay some gift tax.

If those years are still open, you might want to amend the returns and get a bit of income tax money back.

--Peter
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