The Tax Court has held that the value of an airline ticket received in the redemption of “thank you” award points from a bank must be included in gross income.

In the case of Shankar v. Commissioner, 143 T.C. No. 5, the taxpayer, Parimal Shankar, received 50,000 thank you points from Citibank in 2009. Citibank reported to Shankar and to the IRS on a 2009 Form 1099-MISC, Miscellaneous Income, “other income” of $668. Shankar did not report the income on his Form 1040.

At trial, the IRS introduced into evidence as a business record the affidavit of an authorized custodian of records for Citibank, with attached documents showing that Shankar redeemed the points to purchase an airline ticket. Also attached was a letter from the custodian valuing the airline ticket at $668.

Shankar testified that he knew nothing about the thank you points and received no award. However, the Tax Court said, “On balance, we give more weight to Citibank’s records showing Mr. Shankar’s receipt of an award than we do to his testimony to the contrary, and we find that he did in 2009 receive from Citibank in redemption of 50,000 thanks you points a restricted coach class airline ticket.”

The Tax Court concluded that Shankar’s receipt of the airline ticket constituted receipt of an item of gross income, and he failed to show that it was worth any less than $668. Therefore, it was includible in his gross income for 2009.

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