When you get a coffee mug from your public radio station in response to a contribution, it’s considered a minimal gift; no tax is involved. But when a bank’s gift for opening an account buys an expensive airline ticket, that’s different.

In a recent Tax Court case, a couple received thousands of “thank you” points from a bank for opening an account. They redeemed the points to buy an airline ticket worth $668. The bank bought the ticket and then issued a Form 1099-MISC, listing the $668 as “other income.” The couple did not list the income on their tax return. The Court held that the airline ticket was a premium to be treated like interest.

However, frequent flyer miles are different. Years ago, the IRS announced that it would not try to tax miles from business travel (or even personal trips) used to buy tickets or upgrades, perhaps because of the difficulty of evaluating the benefit.

For nearly 30 years, Mike Nickerson has owned and managed a small, full-service accounting practice in the Midcoast. He holds a bachelor's degree in accounting from University of Southern Main and a master's degree in financial planning from Bentley University.

He is a past board member and president of the Maine Society of Certified Public Accountants and currently serves on the Maine Board of Accountancy.

An aged rock musician, Nickerson now finds musical enjoyment playing upright and electric bass in a variety of bands spanning folk to jazz music genres. He and his wife have three grown children, and they enjoy their free time hiking, kayaking, golfing, bicycling and motorcycling.

http://www.nickersonpa.com/