IRS Eyes New Ways To Tax Miles of Frequent Fliers

Americans who keep large balances of unused American Express Membership Rewards points, or airline or hotel points, are not all that different from those who choose to buy gold or Bitcoins. They are choosing to store value in something other than U.S. dollars.

And while you're considering whether your  frequent flier miles or hotel loyalty points are income, consider this list of items considered income according to IRS Publication 525:

• Bribes.   If you receive a bribe, include it in your income.

• Found property.   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession.

• Free tour.   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. . . . You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request.

• Illegal activities.   Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.

• Stolen property.   If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner.

• Whistleblower's award.   If you receive a whistleblower's award from the Internal Revenue Service, you must include it in your income.

Just so you know.