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"Ignoring that I believe most of the frequent flyer plans don't allow people to sell tickets to another person,"

Well, I don't fly enough to know. But I read in another forum of people selling Southwest Airline tickets received from a FF program.

" I bet the IRS would view the act of converting the points into cash (i.e. the redeeming and selling parts of the post) as generating taxable income."

Sure, but is your buyer on Ebay going to send you a 1099?

"Donating that same amount of money would likely end up, therefore, as a tax wash since the deduction would equal the extra income."

It would seem to me to depend on how the miles were gained. Rebates are not taxable income, so I'd argue that if you gained them from flights paid for with personal funds it wouldn't be taxable income. It could be different if the points were gained for flights taken on your employers nickle. But pmarti says "The IRS has been trying to figure out a way to tax business miles redeemed for personal travel for years without success."
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