Airline miles are taxable?

Recently, Citibank started issuing Form 1099s to customers who opened accounts at the bank and received airline miles as a prize. The bank valued the miles at 2.5 cents per mile. According to Citibank, the airline miles are considered a prize and, therefore, taxable under Internal Revenue Code Section 74.

Citibank claims that miles earned by using their credit cards is different and not taxable. The bank considers airline miles like a discount or rebate and pricing discounts are clearly not taxable. The discount in price or rebate is simply a reduction in the price paid by the consumer.

IRS is processing Citibank's filing and trying to come up with a straight forward answer. Unfortunately, a straight forward answer is not associated with the IRS.

No More Multiple Parsonages for Ministers

Yesterday the 11th Circuit Court of Appeals in Atlanta reversed the Tax Court (Driscoll v. Commissioner) decision that granted ministers the right to claim expenses on more than home as part of their housing allowance. In a concise, strong opinion the court affirmed the historical understanding that a minister may not claim housing expenses on more than one home as part of their housing allowance.

If a minister claimed expenses on more than one home in reliance on the Tax Court decision, the minister should amend their return to remove those expenses.