Brief Fact Summary. Appellant, Dr. Phillip Charley, used a frequent flyer mile scheme to convert frequent flyer miles into cash. The airline tickets were purchased by his employer and billed to the clients. He argued that the conversion of the frequent flyer miles should not count as income.
Synopsis of Rule of Law. Gross income includes all income from whatever source derived.
Gross income includes all undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.View Full Point of Law
Issue. Did the money from the travel credits constitute income?
Held. Circuit Judge O’Scannlain issued the opinion for the United States Ninth Circuit Court of Appeals in affirming the tax court and holding the money was income.
Discussion. Appellant exchanged frequent flyer miles for cash through a process intended to gain money. No matter how Appellant characterizes it, he gained money through these transactions and such should be included as taxable income.