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Message: [QUOTE="DaveHuskiesFan, post: 3964660, member: 935"] Yeah I saw this this morning and it’s interesting. But my situation is a little different... The grand prize is 1 Million American Airlines Miles which American Airlines has put an Approximate Retail Value (ARV) of $22,400 on. American Airlines will be sending a 1099 for the ARV. Given my tax bracket + state & local taxes totaling 30%, my Tax Liability on the ARV would be $6,720. However, I am aware that ARV is not what you are taxed on, you are taxed on the Fair Market Value (FRV). I believe the FMV is somewhere around $12,000 and to know if I have sufficient evidence of that in the result of an IRS audit (below). Bottom Line: I wouldn’t accept the prize at a $22,400 value, but would somewhere between $10-15,000. For the below examples I’m going to use a Valuation of Cents Per Mile (CPM). American Airlines is Valuing 1,000,000 Miles at $22,400 which imputes a $0.0224 CPM. [ATTACH type="full"]67279[/ATTACH] In the example above, American Airlines is willing to SELL me 215,000 Miles for $4,837.50, imputing a CPM of $0.0215 or a FMV of 1,000,000 miles at $21,500 [ATTACH type="full"]67281[/ATTACH] In the example above, for the same exact flight (Date, Departure, Arrival, Flight #, etc). American Airlines will BUY from me 21,500 miles in exchange for a seat on the plane. They are charging $174 for a seat that same flight. This imputes a CPM of $0.00809 or a FMV of $8,093. There are countless examples of the above, which I would be able to screenshot and provide as evidence. There are times where you can meet or exceed $0.0224 CPM (usually booking business class), but those examples are much less frequent than times where the CPM is significant lower than $0.0224. The Ask: Are these examples sufficient evidence of that the FMV is less than $22,400? I would likely value that FMV at $12,000 on my tax return if I accept. [/QUOTE]

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