Planning on getting the Chase Rewards MC as soon as I read the confusion has died down (with the telephone reps), or there's an online link.

But my real question is, why do the airline affinity cards still exist? They give only 1 mile/$, have $50-100 annual fee, and have blackout dates (or capacity controls since they're just regular miles). With these 5% cards, spending $5000 gives you a ticket with no blackouts or limited seats, and no annual fee. Am I missing something?

libralibra said:Planning on getting the Chase Rewards MC as soon as I read the confusion has died down (with the telephone reps), or there's an online link.

But my real question is, why do the airline affinity cards still exist? They give only 1 mile/$, have $50-100 annual fee, and have blackout dates (or capacity controls since they're just regular miles). With these 5% cards, spending $5000 gives you a ticket with no blackouts or limited seats, and no annual fee. Am I missing something?I think that's why many still prefer cash rewards over miles, but lately I'm open to both.

My reasons: great ongoing bonuses like the Delta double miles promotion, business credit (e.g. AMEX Delta Gold) can earn application bonuses aside from personal bonuses already received, miles are not counted as purchase discount on your income taxes. It is the bonuses that draw me back to the card.

Cheap said:tooshy said:miles are not counted as purchase discount on your income taxes.
Purchase discounts (miles, cash, alien bodies) are not taxed and are not reportable to the IRS. Am I missing something?My understanding is cash rewards earned may need to be considered as an expense discount on items deducted for tax purposes. I think the loophole with miles is in the T&C, where it says miles have no cash value.

If you can substantiate otherwise, it would be welcome news to me.

geo123 said:Cheap said:Purchase discounts (miles, cash, alien bodies) are not taxed and are not reportable to the IRS. Am I missing something?
When it comes to personal expenses, that's absolutely correct. Please note, however, that rebates obtained in connection with business expenses for which you are reimbursed in full are almost certainly taxable.I had this understanding also, except in a recent discussion in this forum, LH2004 pointed out examples where personal expenses if deducted would be affected.

tooshy said:My understanding is cash rewards earned may need to be considered as an expense discount on items deducted for tax purposes.
What's an "expense discount"? As Cheap correctly stated above, cash rebates and rewards obtained in connection with items used for personal consumption are treated as discounts off the purchase price of the item and are not, therefore, reportable to the IRS or taxable to you. Please note that they do reduce your basis in the items to which they apply, which becomes important if you later resell the items at a gain.

tooshy said:I had this understanding also, except in a recent discussion in this forum, LH2004 pointed out examples where personal expenses if deducted would be affected.
I am not sure I understand what you mean by the above sentence. The fact that rebates and rewards obtained in connection with items used for personal consumption are not taxable does not mean that you do not have to pay tax if you sell the item and recognize a taxable gain.

As for the thread, is this the thread you are talking about? What is your question about it?

Edit: Tooshy, let's not discuss this in the thread, since such a discussion is beyond its scope. Instead, please PM me if you have specific questions or just post your question in the eBay thread I posed above.

tooshy said:I wasn't thinking of gain/loss. LH2004's example (if I recall or understand correctly) was an itemized Sch A medical deduction, that would have to show the rebate subtracted from the purchase price of the item being deducted.
Of course, and this is not confined to the just the value of medical services. If you are deducting any item on your returns, the reward/rebate that you received in connection with the item reduces the deductible value of such item.

Except with miles correct?
Yes, the IRS has announced that it will not attempt to tax frequent flyer miles received from business travel but used for personal travel. The IRS cited as its reason the timing and valuation of the benefit as well as the complexities involved in determining the source of the reward. Please note that this also means that you cannot use your miles as a deductible charitable donation.

Once again, this is ONLY a concern if you are obtaining rewards or rebates in connection with business expenses for which you are reimbursed in full or in connection with any expenses which are otherwise deducted on your tax returns.

With tiered rebates, bonus rebates, etc., there may not be an easy way to determine the proper "discount" for a specific item. I say forget about it.

Morty said:Also add the Advanta Platinum Business Rewards Mastercard that provides 5% back on gasoline, office supplies, technology items, and utilities, 1% on everything else. Max $25/month. Watch for merchants that code as general retail (such as Dell), so you need to be selective about using it.
libralibra said:But my real question is, why do the airline affinity cards still exist? They give only 1 mile/$, have $50-100 annual fee, and have blackout dates (or capacity controls since they're just regular miles). With these 5% cards, spending $5000 gives you a ticket with no blackouts or limited seats, and no annual fee. Am I missing something?Not everybody travels only domestically. Priced a flight to Europe or India in high season? In that case, miles are king, if you can use them. Or you can nearly always spend twice the miles to fly on the last available seat. Ever have to go to a funeral last minute? Its often 5 times the price, but only twice the miles. Or flying business or first class. Lots of reasons for miles over cash.Great post....too bad I can't vote. One question...based on the T&C of Advanta's Business card program, is there a clause that discourages personal use of a business card. As to whether you choose to do that and comingle personal w/business, that's another matter...

Great point about using miles for last minute flight bookings!!

Original poster,

While I recently pointed out to you that the Citibank Diamond Preferred Card only offered 5X points at Gas Stations, supermarkets, and drugstores, and appreciate you removing the card from your list could you kindly add the corresponding AT&T version called the AT&T Universal Rewards card which offers you 5X thankyou points at Gas Stations, Supermarkets, Drugstores, and on AT&T purchases for the life of the card in addition to some calling benefits each month. This card was exactly the same as the Diamond Preferred until they changed the Diamond Preferred to 12 months for 5X spend from lifetime. Although not a great card it does have potential due to the airline tickets and thankyou network merchants access where you can earn up to 40 points per dollar spent with select retailers by clicking on the corresponding link.