When American Airlines ran a holiday promotion in conjunction with Mastercard on their joint venture SimplyMiles website, I went all-in. They offered sextuple miles on all offers, and the most lucrative was unlimited 40 miles per dollar donating to Conservation International – a charity Mastercard was raising money for.
That meant earning 240 miles per dollar, or buying miles at $0.0042 apiece. I did 7 million miles. That’s hardly ‘the most’ anyone went for. I know of several readers who did more than me. One reported earning 12 million miles with this promotion. I wonder if anyone went bigger than that?
Someone said in the comments to one of my posts that the 7 million miles I generated meant ‘a lifetime in business and first class’ but it really doesn’t. Current pricing for a business class roundtrip to the Maldives in Qatar Airways QSuites is 140,000 miles – 420,000 miles for a family of three. To be sure, we can do that 16 times. But award prices will rise, and we aren’t going to get that kind of value on all our redemptions.
I think back to Dave Phillips (‘The Pudding Guy‘) immortalized by Adam Sandler in Punch Drunk Love whose 1.2 million miles seemed like so many when I first got into miles and points, until I’d quickly amassed my first million across several programs. Now it just doesn’t seem like that many miles at all (indeed, I had more American AAdvantage miles than that before this promotion.)
So what does 7 million more American AAdvantage miles really mean? Here’s how I thought about what I wanted to get out of the promotion, and how I decided on the level to shoot for.
- I haven’t seen my family in Australia in two and a half years.
- These are tough awards to get, and historically I’d book trips based on premium cabin award availability and go through backflips to get the best deal possible
- But these 7 million miles mean the freedom to see my family on my own schedule
A saver business class award seat between the U.S. and Australia runs 80,000 miles. That can be tough to find on Qantas and even tougher to find on American Airlines.
But take a 195,000 mile ($819 with this promo) business class award on American which has much greater availability. That’s 390,000 miles roundtrip, or 1,170,000 miles roundtrip for a family of 3. Seven million miles lets me do this six times.
In all likelihood I won’t spend all the miles this way. I will still search for saver awards, and fly first class on the Qantas A380 whenever possible. I’ll use miles to fly places besides Australia.
But ‘half a dozen trips to visit family in Australia, whenever it makes sense for us to go (unconstrained by saver inventory)’ was my basic rubric.
This isn’t the most miles I’ve earned through a promotion. I generated more miles through the 2009 holiday shopping promotion, and miles were worth more then. But it’s my biggest score in over a decade. Part of me thinks going even bigger made sense but there were risks and hassles and I decided against giving myself actual sleepless nights until the promotion worked out. It’s only now that it has – in hindsight – that chasing even more miles is something I’d consider.
Reader Fernsie got the deal at 939am on the 14th. So, neither you nor anyone else denied any person the opportunity to participate. The offer ended at 10am that day and AA is honoring transactions prior to that. No whining.
Hi, I’m not following. Even at a six times multiplier you need to spend over $1. 1mm on your credit card to get seven million miles. That’s a huge amount of spending for most people.
I thought track it back would never happen again. I was wrong.
Agree with Reno joe.
I did 1.5m miles and of course now I wish I had done more. I’m very similar to you in my situation (family of five with all of my extended family in oz). I’ve snagged 3 seats in qf f before (week before Christmas 2019). 330k points = $1400. Amazing value. I will say average award of 65k (averaging over Europe, Asia etc) means 2-3 roundtrips for the family for my $5500.
I also have been thinking about paying 180k points. But prob won’t.
Some of the non save awards are still amazing at that price. Eg 95k ord hnl. Even 150k points for a flat bed hnl to ord is good value. But only if I had 10m miles. At 0.0042 there is a lot of room. Even 375k to aus biz isn’t the end of the world. But the opportunity cost is high.
Hoping to q suites to Africa.
My goal was a measly 1 million…. But didn’t have that offer on my account despite multiple different credit cards. Oh well
Lol. This is what you call a backdoor deval, Gary.
But yeah, you keep saying this doesn’t move the needle while people are already talking about the “value” of 100k domestic awards.
You spent $30K on these points. That should probably be a part of this story (yes, those funds are going to be used for travel you would have bought anyway) but that is not an ordinary stack of cash.
Jeff M – thanks for pointing out how much money was spent acquiring these points. That is indeed a very “relevant” point that a reputable journalist (but not a blogger) would have clearly stated.
Lol @Mick
Nope, points aren’t being devalued due to a spike in available miles from this. Just a dude giddy for 150k domestic awards.
Bwahahahahahahhaha
Most of us probably don’t have $29,000+ lying around to spend on an advance purchase of what would be years of future travel.
I donated $1k to a charity and got 240k miles.
I’m happy.
Just because you can doesn’t mean you should. The large amounts spent on this promo by a small group of folks determined to see who could get the most will have aftershocks of less offerings like this (as evidenced by the early end of the promo) to your regular guy who had been scraping to accumulate enough miles for 1 ticket in economy now having a devaluation and not getting to go.
Really disappointed in those who participated to an excessive degree.
Congrats! Please explain exactly where you found the offer, and how it worked.
It may come around again and I’d like to be prepared.
Thanks!
Agreed with other posters- the amount of cash up front is worth noting. $30k on airline points is a big spend, even with the big discount.
Those claiming that Gary shouldn’t have taken this deal should also remember the risk involved in the transaction. Both the upside, 7 million AA miles, and the downside, that the offer wouldn’t be honored. The United states is a free county, and he has the freedom to take a calculated risk in legal transaction. Nice win Gary.
I’m a bit grumpy because I never got the Conservation International offer. I made the decision to wait a couple of days and see if it came up, rather than using my available MasterCard credit on some of the other offers that were well worth doing, but not nearly as good as CI. But the promo ended and I lost out. So it was a big plus for some, a minus for those of us who will be competing for seats with the lucky ones and living with the inevitable devaluations.
@ BookGirl305 — There is NO devaluation, so why are you complaining exactly?
I understand not everyone has that kind of money to “buy miles”, but there are people who do donate that kind of money to charities every year. Has anyone asked Conservation International how they feel about the promotion? I missed this opportunity, and had never heard of Conservation International, but I’m guessing they were pretty happy with the Frequent Flyer community’s participation (donations) since they hit their target well ahead of schedule (thus pulling the promo early”). I donate money to my University and get better seats at football games. You donate money to Conservation International and get better seats on airplanes. What’s the difference?
The devaluation has already happened.
TATL on American metal usually over 300k one way for travel in June or September
Convinced by all of the eloquent and compelling arguments, I’m now trying to determine the measure by which participating in the offer makes a person evil. I’m not certain if crossing a certain number of points triggers “evil” status and staying one point below that number retains “goodness.”
Alternatively, I’m not certain if one point alone triggers “evil” status and each successive point purchased makes a person increasingly evil. I would ask the person duly authorized to determine these matters to assist me on this. Thanks in advance for your help.
@LoeFlyer – Conservation International did not pay for the miles. They got money. (Mastercard keeps an administrative piece.)
I agree that the cost of $30,000 shouldn’t be left out of the equation. If your benchmark is 18 (3 x 6) future business class r/t tickets to Australia then, in effect, you prepaid about $1,600 per roundtrip. That would be an excellent price if you were buying the tickets for use soon but it’s far from free, it’s more than the commodity price of transport, and you definitely have to factor in opportunity cost, devaluation (will you only get 5 trips in the end?), and the intangible loss of flexibility in availability.
Oink -Oink, 1 million would been have enough which would leave another 6 million for those not having $30,000 sitting around.
Post hilites why this promo ended so much earlier than advertised for “normal” donators
@devalutionstation. Just saying, these miles are so cheap I’d consider 150k for the right seat. But I probably won’t because there is still plenty of saver availability out there if you’re flexible. I’ve flown royal jordanian, etihad, Qantas, JAL etc on aa miles.
Incidentally how impactful is this on the total pool of miles? I’d imagine there are billions of miles generated per day from flying and spending. You think this is going to ruin all of the one world programs? Doubt it. Remember airlines can’t sell a ton of their os biz space to non business travelers. They need to burn this space and prob don’t mind doing it even at 0.0042 per point.
Interesting thought – In theory, the “donation” to Conservation International is tax deductible. Depending on marginal rates, that $30K donation really only costs $22.8 K to $20.4K (or less, if you’re really raking it in.) That makes the cost of the miles even less. But IRS rules require you receive nothing tangible in exchange for the donation. As I understand it, Conservation International isn’t providing anything tangible, but the donor is receiving something by donating.
If people claim this as a charitable donation, are they asking for trouble from the IRS? (And no, I didn’t partake.) I’d be asking my accountant or tax lawyer about claiming this one before I claimed it.
Congrats Gary!
@CM: It’s quite common that only part of a donation is tax deductible — a typical donation to public radio, for instance, where you get a coffee mug or cook book is like that. You can get a “tax substantiation letter” from the charity which breaks out the value received and the portion of the contribution that’s tax deductible.
In this case, it’s more complicated because the non-taxable portion is not contributed by the charity (or maybe some is and some isn’t) and they may not know how much you got, and miles are subject to valuation anyway. The safest thing to do is not take any deduction at all (since, inarguably, you got more value than you gave). The next safest would be to request the tax substantiation letter and follow what it says in there. The third is just to deduct it. The complexities of this transaction are such that that IRS is unlikely to concern themselves with the value received.
But also note that recent changes to the tax laws have made itemizing deductions less attractive. If you don’t itemize your deductions you can still deduct charitable contributions but only a tiny amount (I think $600 per couple?) so the deductibility issue is not of concern for most tax payers.
@LarryIn NYC – I appreciate all that, but if you’re able to afford a $30K charitable deduction, you’re probably itemizing and looking to take advantage of it. If you gave $1K, not something that’ll trigger the IRS, unless they start flagging donations to Conservation International, which wouldn’t be hard once they get wind of it. It won’t happen right away, but in a few years, maybe.
If you got this deal, you got a pretty good deal. Trying to make it an even better deal is something those who got it are going to have to decide for themselves. Just pointing out that there is some risk here, so be careful and consider the downside if you get called on it.
The tax man cometh. Because Gary can’t shut up about it.
In the blink of an eye AA can claim you abused the system and close your account.
If you claim a deduction to a charity when in fact you made money off the charity then the IRS might start thinking tax fraud.
Maybe Australia will keep it’s borders closed for the next 20 years and you can use your miles at 500k a pop for a saver award from AUS to DFW.
@Alphons – if Australia keeps its borders closed, I just give tickets to my family to come visit me (Australians are now permitted to leave the country)
Will you claim a $30K tax deduction for your charitable contribution?
@BookGirl305 :
Just what is “an excessive degree?”
Whatever you decide?
In business, “buying more” is good, not bad. Donating more is even better.
Perhaps you’d like to ask the charity to refund the money because your greedy perception of YOU not receiving good mileage offers in the future is more important that conservation.
You’ve made it clear you care only about yourself.
FOCUS.
Nice to have $30K burning a hole in your pocket! At least the charity got a nice cash donation…. in the name of AA who gets the tax write-off! So who really got the “great” deal?
@loungeabuser1 my comment has nothing to do with a charity or donations made to one. It has to do with enough people making donations/purchasing amounts in excess of what the normal and expected practices would be that the promo was pulled early because the sponsors of the promo didn’t expect that level of play. That’s not a good look on anybody involved from any side.
Gary, I am very happy for what you have achieved here, and I thank you for sharing this deal with all of us as well. This is a a tremendous score, and is a great moment in miles junkie history. Happy new year to you, and enjoy your travels! Not having to sweat finding low-level award space is real freedom!
@BookGirl305 The issue is what you view as excessive is different than other people. We were in for $500, but if I had done $1,000, my P2 would say that is excessive. People that have a need for large amounts of miles may not even consider $5K or even $30K excessive. Companies should really just put limits in the terms to avoid this exact issue (to stop what the company views as excessive). Chase does this with the $1,500 Freedom bonus limit per quarter. Amex just did this with the recent Marriott Paypal promo (I think at 5K). However, some of these large companies don’t want to pay people to run the rewards programs to stop issues like this coming up. This happened with IHG a few years ago with the classic 3×5 Mastercard Priceless promotion. Basically, it’s hard for companies to have it both ways (i.e. I don’t want to pay people to run the program, and at the same time, I want the program to behave exactly the way we thought it would when we drew it up on the whiteboard).
Some of the commensts talk abotu the risk and the downside. ZERO risk. If they reneged on the offer shown the buyer swould have demanded a refund/reversal or disouted the charges like any transaction would. Remember these are credit cards. Now there might have been some back and forth but the charges would have to be reversed and credited back. The only risk is the award charts keep changign and make his Aistralia trip cost 50-100% or more than what it does currently.
Hey, I have an idea. If you read about a deal and have reservations about it, or it’s not something you’re comfortable participating in, how about passing on it, moving on, and refrain from deciding how others should or shouldn’t act.
Here’s to a healthy 2022 for all, and thanks for allowing me to receive almost 1/4 million miles for my $1k donation. I’ve had a repeat of track it back on my Christmas wish list since forever. I must have been a good guy this year.
@BookGirl305:
AA through Simply Miles made an offer. Gary and other accepted that offer.
That’s all.
“Normal and expected” puts the result before the act of purchase. It requires individuals to say, “you know, maybe I’ll cause this offer to not be available for others, or worse yet, maybe if I and others take advantage of the offer in large amounts, this type of offer won’t be available again.”
You’re imputing to the purchaser a responsibility to have perfect knowledge of the present and future. The purchaser has no such responsibility nor should she.
Is everyone charged with the responsibilty of self-policing which offers are “too good” and then limiting their participation to some unknown amount?
Stuart says: The tax man cometh. Because Gary can’t shut up about it.
Not true. If you get the miles for the donation and deduct a large donation like this, it will get scrutiny and be disallowed. Why? Becuase they gave you something for it. The miles.
That charity must have raised a lot!
@Bill American Airlines didn’t make the donation. Individual AAdvantage members made donations through Mastercard’s portal (Mastercard is the one raising money for this charity). Mastercard keeps a portion of the donation for administrative costs and passes on the rest to the charity.
The individual making the gift needs to decide whether or not to deduct their gift. Ordinarily the market value of items received in exchange for a gift reduce the value of that gift. If you make a $500 donation and get concert tickets that sell for $100 as a premium, you’d only be able to deduct $400. Here I believe the value of the miles is greater than what you’ve donated. Not tax advice, I’m not a CPA. But I do not believe there’s a viable deduction.
Congrats on your (totally legit) miles heist, Gary! You and other folks who scored millions of miles made out like Oceans Eleven! I only put in $150 for 36K miles, which is hopefully good enough for a cheap economy ticket on AA (womp womp).
Used a few hundred thousand AA miles to score First Class A380 tickets on Qantas to/from Australia in late 2016 (booked almost a year earlier and shortly before AA’s huge devaluation). I don’t expect to ever be able to do that again, but the windfall you scored obviously makes that possible. Like Matt Damon says in the TV ad, fortune favors the brave. Live the dream!
For the past three weeks, it has been pointed out time and time and time and time and time and time again that this donation is NOT deductible. It is not deductible for two key reasons. First, for a donation to be deductible, the donor MUST have an acknowledgement letter from the recipient charity stating a) the amount of the donation AND b) the value received by the donor in exchange for the donation. IF YOU DO NOT HAVE AN ACKNOWLEDGEMENT LETTER FROM THIS CHARITY, YOU WILL BE UNLAWFULLY CLAIMING A DEDUCTION. Second, the value of the gift MUST be in excess of the value received by the donor in exchange for the donation. IF YOU HAVE SUCH A LETTER, THE LETTER WILL STATE THAT THE VALUE RECEIVED BY THE DONOR IS IN EXCESS OF THE DONATION. YOU WILL BE UNLAWFULLY CLAIMING A DEDUCTION BECAUSE IN THIS CASE THE VALUE YOU RECEIVED IS IN EXCESS OF YOUR DONATION. Everyone is on notice.
@Josh – lots of articles about this but this was not just on credit card spending alone. It was a 240 miles per dollar for a donation. So a $1K donation earned 240,000 miles. $10K earned 2,400,000, etc.
As far as I’m concerned, the donation just paid for itself in multiples. I just did a summer US to Japan booking. Cash cost in Economy was ~$3,500 RT each, but there was a 70K AA web special available for a family. My recommendation is to book now before the other AA millionaires do while there’s availability.
I don’t begrudge Gary for going big; I do take issue with him breaking the golden rule by calling the airline when the offer was still live.
This deal was only honored because of the public commitment AA made to Gary after the time Mastercard wanted to pull it. if AA had remained quiet only transactions through Saturday would have been honored.
Nice comment Rich. I agree with you.
They kept it live for like 3-4 days. Maybe the publicity is worth it. Same with the mistake fares. I reckon they know what they’re doing most of the time. They’re not losing $10k by mistakinglu selling an Air France f fare for $1k. That person wasn’t going to fly anyway lollll
What you and others did closed the promotion within days because there were a limited amount of award miles that could be obtained. The promotion was a gold mind for those who had resources to acquire vast amounts of miles and caused the promotion to end. These type of windfall promotions should have a limit so more people can participate. Yes this was a once in a lifetime promotion but in spite of that being the case you as a professional mile guy benefited and others were locked out. The old saying applies the little guy got screwed by the big guy!!!
congrats on the deal. truly epic.
You and others killed this program for us. Congrats.
Am I doing the math right that you made a $30,000 donation? If so, is that entire amount tax deductible?
Rob, read the comments.
It’s amazing, the mental gymnastics that the people who didn’t/couldn’t pull the trigger are going through, trying to make the people who did/could into the bad guy.
Congrats!
Edward Peters, you’re wrong. I’m not one of the blog insiders but I got in on the deal . . . very late. Reader Fernsie is a little guy / gal and put it his / her donation at 939am on the 14th and he / she got in on the deal. This deal was open for 4+ days. In spite of an intended points cap, AA and MC have honored all donations made prior to 10am on the 14th whether from a big guy or little guy. You screwed yourself because you weren’t reading any of the blogs — you were inattentive — you were not in the game. If you want to capture such deals, get in the game. No one wants to hear the tired, old, entitled self-pity from you or any other crybaby. Are you a millennial?
In some ways, the Best Buy version of this deal was actually less risky and possibly more lucrative than the Conservation International version (even as the Best Buy version was priced so as to appear on its face to be a more expensive way to buy the AA miles than the Conservation International version).
The Best Buy purchases could be resold in a way that isn’t as generally applicable to charitable deductions.
You are an ass.
Bloggers ruin this and then brag about like they did something. It’s rare to see any blogger truly give some good information that helps people. Another reason I would never use a referral provided by any of them.
With the planet currently being disrupted by climate change events you think this is a good idea? The next generation will not be thanking you. I am trying to fly less or do carbon off sets.
Wake up!
Joe Workingclass, you say, “It’s rare to see any blogger truly give some good information that helps people.” So, why are you even on this web site? Or any travel / points web site for that matter? Go spend your time on sites that DO truly give some good information that helps people. The same goes for all of the other individuals who feel the same way. Don’t go away mad, just go away. Spend time on web sites the DO help you.
You people sound like the pathetic, petty kind of person who hates the guy next door because he got a new car on sale over the weekend and you didn’t.
I’m just a reader. I’m not a blogger. I have no inside track into this stuff. The tips and tricks that Gary and a number of other bloggers have written about have helped me (and my family) immeasurably. I would even say they’ve had a definite positive effect on my life. So, for me, I’m grateful. Thank you Gary and Ben and Greg and Nick and Mark and Shawn . . .
Agree with @Reno Joe, travel blogs like Gary’s VFTW, Ben’s OMAT and others posted about the AA/SimplyMiles offer with Conservation International for several days before it was taken down. If/assuming someone checks these sites daily or least every other day, they would have had ample time to get in on the deal. I got in on the last day and donated $150 (which netted 36K miles) because that was my comfort level in case the 5X bonus wasn’t honored. For those like Gary who went all in (and got the big payoff), good for them.
For those who are whining/complaining, anyone who was paying any attention to these blogs and who took action on the offer (within the first two days) should have scored.
Uh, Gary found an excellent travel offer, optimized it, told us about it, and took advantage of it himself. What’s he guilty of, eating what he cooks? If you trolls feel bad about that, then just go somewhere else; the internet’s a big place. Thank you, Gary, for telling me about it, so that I could benefit, and congratulations on benefiting from it yourself. And, by the way, there’s nothing wrong with bragging about it, either. All these negative comments are really bad form.
How can I get to 7 million miles
And, once more for old times’ sake . . . NO, THE DONATION IS NOT TAX DEDUCTIBLE.
@Reno Joe
The donation email does not say the donations are not tax deductible, it says:
“Conservation International has charged your card ending in #### for the full donation (less any applicable standard card processing fees) and will appear as the merchant of record on your card statement. Conservation International is a 501(c)(3) charitable organization. Please consult with your tax advisor about any deductibility.
You’ve also earned 40 American Airlines AAdvantage® miles for every 1 dollar donated. Please allow up to eight weeks for the bonus miles to be posted to your AAdvantage account. Donations can only be accepted in U.S. dollars. Donations made in connection with AAdvantage® bonus miles program are not refundable. The receipt of miles may reduce the tax deductibility of your contribution, please seek a financial advisor for tax related questions.”
Personally, if I itemized, I would be comfortable taking the donation unless CI provides a quid pro quo statement otherwise. Nonprofits are required to provide that statement for quid pro quo. I would use the email from SimplyMiles/Mastercard for proof of the donation. However, I don’t think CI will provide a quid pro quo statement since I think this promotion is just like any other time people get credit card benefits for donating. To each their own. I’m not a tax attorney.
Shame on me. I didn’t get in on this promo because I didn’t see it, plain and simple. Wish there was a way to have a better handle on all the different blogs and promo’s. Too often, I’m late to the game, because my inbox is filled with travel blogs and I’m so conditioned to “here’s another passenger that went nuts on a flight”, I probably deleted it… or simply didn’t get the email. Either way, awesome for those that got in!
Ceric Rushmore, read all of the comments in the thread. You will find your answer. It accurately states the legal requirements for deductibility. Review it with your tax advisor. My sense is that your tax advisor will agree. My advice is to comply with the law.
There are two legal theories for the deductibility problem. One looks at the transaction as a whole, the other looks at the parts. (And I’m not a lawyer or CPA, so this advice is worth what you’re paying for it.)
1. Looked at as a whole, you definitely got something of tangible value in exchange for your contribution. Although the IRS doesn’t treat miles as taxable income in conjunction with a purchase, in large amounts, like a sweepstakes where you win 1,000,000 miles, they do consider it taxable income, valued at whatever it costs to buy them at retail. So your contribution is not deductible. A conservative tax advisor would recommend this option.
2. Looked at in part, you could say the charity didn’t give you anything in exchange for the donation, and they did issue the correct forms, therefore it is deductible. Anything you got from the transaction came from the credit card company – but that opens up the door that the miles are taxable income. An aggressive tax advisor would pick this option, but only the deductible part, not declaring the miles as income.
YMMV.
Between the Internal Revenue Code, Treasury Regulations, and case law from the U.S. Tax Court and federal appellate courts, there is a body of law that imposes requirements to claim a charitable contribution deduction. From that, the IRS develops official guidance to taxpayers in the form of publications and topic papers. In the present case, Topic 506 is applicable. My prior comments stating the legal requirements to claim a deduction were a paraphrase of sections of Topic 506. Yet, so many readers — ignorant of the law — feel they know better. Below are verbatim passages from Topic 506. The matter is black and white. It would be offensive to intellectualize why you should be able to deduct it, so don’t.
“For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.”
“If you receive a benefit in exchange for the contribution such as merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can only deduct the amount that exceeds the fair market value of the benefit received or expected to be received.”
It is too easy to legally reduce one’s taxes. Don’t compromise yourself over this.
@Reno Joe – I 99% agree with you and think anyone doing this on your own should follow your advice. But the people who earn the big bucks are the people who push the envelope. Maybe they know the rule but chance taking the deduction under the idea that the chance of an audit is remote or just a cost of doing business. They can afford to take the hit if the deduction is denied, as it’s not likely to be ruled criminal, just a penalty for an improper deduction.
The big money is on the corporate side – does Mastercard or American claim everyone else’s contribution as a charitable donation? Now that’s an angle shot with some money behind it. I wouldn’t bet against this being some sort of well thought out (legal) tax scheme.
I do this for a living. And, I do this with tens of millions at stake. You’ll just have to trust me. What you suggest is called audit roulette. A tax practitioner who engages in that and is caught is disbarred as an attorney, CPA, Enrolled Agent, etc. A tax practitioner would have to disclose the illegality to the client. The client is then making an intentional choice. Which then invokes tax fraud. Don’t intellectualize it.
C_M, one last thought. The courts have held that the standard of legal review on the specific point about the acknowledgement letter is “strict compliance.” That means NO wiggle room for even a tax planner. I am aware of a $20+ million donation in which the donor received nothing in exchange that was disallowed because the acknowledgement letter failed to include a statement that the donor received nothing in exchange. One rotten sentence missing.
Now try to do it without even an acknowledgement letter. Just try to find a practitioner who is willing to lose her/his license over a “small” donation such as this. If you do, you wouldn’t want to use the person. It far to ease to legally reduce taxes, so why take the risk?
Someone indicated above that there would be compliance letters. Would be interesting of anyone who participated in this let’s us know if such a letter is issued and what it says, but I won’t hold my breath.
As for the disallowance due to the missing sentence, how hard would it be to reissue a new letter that was in compliance, then refile an ammended return? For that matter, I’m sure colleges issue this sort of letter all the time, not mentioning that someone got admission to said college as a result. I hear the going price is now in the mid-seven figures at a certain school outside of Boston. The fact that such deductions are allowed and the school hasn’t had their not-for-profit status revoked says an awful lot about who makes compliance decisions in this country.
@C_M
I can’t imagine that this is any scenario that the miles are taxable. This is clearly a rebate on a purchase.
@Reno Joe
Publication 526 outlines what can be deducted. It is worth noting that:
You can’t deduct a cash contribution, regardless of the amount, unless you keep one of the following. A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. Bank records may include: a. A canceled check. b. A bank or credit union statement. c. A credit card statement.
I just checked my P2’s Chase statement and it lists the name of the qualified organization (Conservation International, not Mastercard), the date of the contribution and the amount of the contribution. As I pointed out earlier, in the absence of a quid pro quo letter from CI, I would be very comfortable deducting this if we itemized. I don’t even think it would be considered that aggressive since it even meets the terms of publication 526.
As a general comment:
I don’t think people need to accuse others of fraud since that is quite a ways away from applying here. No one is forcing other people to take the deduction if they don’t want to. Not everyone uses CPAs and some people are probably going to be comfortable deducting. I think the IRS has 3 years to disagree.
Hats off to strangers arguing over tax write offs and the whining here. I haven’t seen any proof of 7 million miles