Some posters on FlyerTalk and LA Times have said they are receiving 1099 (Misc Income) statements from CitiBank for receiving 25,000 ThankYou points as $625 income. This means that with each bonus they pay out, CitiBank gets to write it off at a $625 business expense. Why is CitiBank able to do this when I can’t even redeem these 25,000 ThankYou points for that value? I can only redeem 25,000 ThankYou points for $175.
If a $15 rewards check requires 2,500 points, then the valuation of 1 point is 0.6 cents. $250 for 35,000 points ends up being 0.71 cents per point. Why should CitiBank get 2.5 cents as a business expense per point, when I can’t even redeem at a 1 to 1 ratio?
I am going to make it a point of signing up for a CitiGold account, get my 40,000 points, receive my 1099, then write a letter to the IRS that CitiBank is cheating on their books. This is BS.