Facts: Recently Latrell purchased a free roundtrip ticket to Milan, Italy with a value of $1,200. The ticket was purchases with Latrell’s frequent flyer miles generated from business travels as a CPA. Those previous business trips were paid by Latrell’s employer and he was not taxed on the travel reimbursement.
Issue: How much income, if any, does Latrell have to recognize as a result of purchasing an airline ticket with frequent flyer miles earned from business travel?
Authorities: Internal Revenue Service, Bulletin No. 2002-10 - Announcement 2002-18. Internal Revenue Service, Publication 17.
Conclusion: Latrell should not consider rewards and discounts issued by credit card companies and frequent flyer miles as