Why I Went ‘All In’ And Earned 7 Million American Airlines Miles With Their Year End Promo

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.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. 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!!!

  2. Am I doing the math right that you made a $30,000 donation? If so, is that entire amount tax deductible?

  3. 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!

  4. 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?

  5. 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.

  6. 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.

  7. 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!

  8. 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 . . .

  9. 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.

  10. 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.

  11. @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.

  12. 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!

  13. 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.

  14. 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.

  15. 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.

  16. @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.

  17. 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.

  18. 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?

  19. 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.

  20. @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.

  21. Hats off to strangers arguing over tax write offs and the whining here. I haven’t seen any proof of 7 million miles

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