WHAT HARRY SAYS: Do you really think a true professional would set you up? If you don't trust him, you should go elsewhere. Here's where we stand. Back in 2002, the IRS issued Announcement 2002-18, which stated that it would not go for additional taxes by virtue of the use of frequent-flier miles. There was no clear statement that this was to be restricted to "earned" miles. The miles you were given as a promotion for the use of a new credit card were not even mentioned. Over many years, the IRS has permitted some minimal amounts to be excluded from taxable income, and frequent-flier miles are among them. The whole furor started this year when Citibank issued 1099 Forms for promotional miles, but not for earned miles. There is a case in court now (Hirsch v. Citibank) to block Citibank from doing this in the future. I think Citibank is off-base here, and I suspect we'll see a favorable ruling from the IRS before the case is heard in court. My advice: Do not report these miles as income until we hear further.
Email Harry Gross at firstname.lastname@example.org or write to him at Harry Gross c/o the Daily News, Box 8263, Philadelphia, PA 19101.