Per Ann 2002-18, the IRS will not assert that any taxpayer has understated his federal tax liability by reason of the receipt or personal use of frequent flyer miles or other in-kind promotional benefits attributable to the taxpayer's business or official travel.

Ann 2002-18 also holds that the above relief does not apply to travel or other promotional benefits that are converted to cash.

The IRS in Ann 2002-18 is treating contributed miles as having no monetary value. If the miles are converted to cash to make a charitable contribution that would make the cash conversion taxable income. In which case any charitable contribution would be offset by an equivalent taxable income on the 1040.