This situation kinda reminds me of the “use tax” that many states tried to implement on out of state internet purchases. Because it was so difficult to track ( unless you were operating at a large scale ), enforcement was very hit and miss. Eventually a court case came along, that more clearly defined sales tax collection in “internet age”. Then processes were put in place and now everyone pays tax on every internet purchase ( for the most part ).
I see something of this sort eventually happening for credit card rewards. Maybe they make all rewards taxable and put the burden on the tax payer to show a deduction for things that were not cash equivalents.
Yes, It’s true. I still write off every imaginable item & they just keep on taxing. It’s wrong!! 
Exactly right
God forbid this might be the solution they adopt. I think millions of non-MSers would raise a HUGE cloud of stink if the IRS tried any such thing.
Yes, that is like worst case scenario. But to some effect, that is what they did for paypal and other peer-to-peer transactiions. So say they set rewards report requirements at $1000 ( just picking a round number ). If you have over that they issue a 1099 and then you have to report / justify it not being truly income. The minimum report level would be key to eliminating 95% of non-MSers.
None of this is necessary. Businesses and sole proprietors alike are required to keep track of their own inventory, sales and expenses. Almost everything is self-reported by a single party – the business itself. Notable exceptions are W-2s and 1099s, when required.
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Earning rewards by itself is not a taxable event. Buying a VGC was never a taxable event.
But in this particular court case, this is what IRS claimed – buying VGC to earn reward is taxable. And that’s why they lost.
I am not sure if they can change claim now once they lost.
I think they lost because they said ALL of the Rewards earned on both of his amex cards were taxable. Clearly that can’t be true, because (1) some of those rewards were earned on non-monetary purchases, and (2) their own long-standing guidance says CC rewards are not income.
They needed to come up with reasoning that doesn’t violate their own guidance regarding CC rewards, and the judge hinted at that.
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As I said in the other thread, no one wants to be in the position of manually adjusting basis or deductions on every business purchase that generates points. I think there will be some sort of de minimis determination that, say, 5% cash back is OK but $300 or $500 sign up bonuses are taxable.
There’s an easy solution to that – don’t charge personal and business purchases to the same card.
Update
It has been a quiet several months since the last update back in February. Things are going along more or less as usual and customary for this side hustle. I do have a single small nugget to report, which I will get to soon enough. But this update is as much about the cards as anything else:
As reported up thread, I have cut down my hustle activity but not stopped entirely. This has left me with rather a surfeit of credit cards. I hang onto them because the available credit helps my score by lowering the percent of available credit I’m actually using. Specifically:
My PayPal 2% card has fallen into disuse. More than anything else this is because of Synchrony’s obsession with fraud. They were driving me nuts refusing legitimate charges for no good reason. They are as messed up an organization as there is. That card is all but sock drawered.
My Citi DoubleCash card has also fallen into disuse. I do not like the split rewards payments (1% now and 1% later). Also Citi has a fraud hangup, though nowhere near as bad as Synchrony.
My Discover, HSBC, Citizens Bank, and JFCU cards are all quiet because at this point, given the more limited monthly spend, I’ve set a 2% reward minimum. Discover and JFCU are 1.5% cards, while HSBC and Citizens Bank pay a reward between 1.5% and 2%. So those cards do not make the cut today.
My active “go to” cards today, all with a 2% or better reward, include Alliant, Keesler, PSECU, PenFed, and my two Bank of America Cash Rewards cards which are used only on a quarterly basis to obtain the 3% reward. That ensemble of cards provides me more than enough credit to propel this hustle today given the more limited activity than once was the case.
OK, I promised a nugget which I’ll use to close this update:
My contact at GTE, since my last update here, made something of a revelation which surprised me. First, on background:
I no longer buy GTE certificates because they are too long. At one time, very early before I knew better, I bought them by the cartload. Anybody who has followed events here knows shorter is better. The shortest CD GTE will sell you has a six month term. Ugh!!
Anyway, I learned from my contact at GTE that many GTE members are buying their six month certificates and then doing an early withdrawal at just two months. The rule at GTE says you may not do an early withdrawal less than two months into the term of the CD.
I challenged her right away, wondering how the credit union could permit members to be doing this sort of thing over and over and over. It has always been my view that early withdrawals are for emergency purposes only. Well, I’m wrong. At least at GTE I’m wrong. I was told they have no objection to the repeated early withdrawals. Period.
OK, (what becomes in effect) a two month CD beats the pants off my customary and routine three month certificates. So why do I not join in at the GTE hog trough? Two reasons:
First, I think it’s wrong to pursue this hustle by cashing in CDs early. I’ve never done that as long as I’ve been at this. And I don’t care that GTE doesn’t care. I care. Wrong is wrong.
Second, I’m chicken. I’ve already been booted out of one credit union (Inova) on account of my hustle activity there. And I did nothing whatsoever wrong. I have a GTE add-on CD the size of which dwarfs overwhelmingly anything happening in my side hustle world. Were I ever to be booted out of GTE, that is if they suddenly changed their mind regarding early withdrawals of the six month CDs, I would be in a gargantuan amount of trouble. So I’m letting things ride as is, using three month hustle certificates spread among four different counterparties, and being satisfied with the profit I obtain that way.
If you have no add-on CD at GTE, hence nothing to lose, I’ve just offered you a path to (what are in effect) two month CDs.
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Good advice. Dont poop where you eat. If a bank is part of your “normal” finances, do not incorporate clever games into the relationship.
Unfortunately, these days 2% credit card cashback on a 6-month CD is still a very good return on the money, relative to anywhere else you can stash the funds - including that 3.14% add-on CD alot of us have. With, like you, my large add-on CD already there, I’m approaching the limit of how much I’m willing to have on deposit with them regardless. But breaking the 6-month CD early doesnt have to be part of the strategy.
Just as a side note - use your Discover card for a $1.99 purchase each month. You’ll get a nice surprise on your statement.
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Yes, I suppose you’re right. I mean, yeah, you are right for sure.
The six month CD offers a scrawny two multiplier. So with a 2% card than’s 4% APY. I would write that the 4% is tax free except that, if I do, I know scripta will show up and become very angry with me. So forget the tax free part. 
(now wistfully)
I remember back in the halcyon days of this hustle, when my Discover card was still in its first year and I had access to those juicy Inova one month CDs with the twelve multiplier, I was routinely achieving 36% APY with that combination. I did well over a quarter million at Inova prior to their shutting me down. That was before I revealed on this thread what I was up to. Probably nobody back then would have believed 36% APY was real anyway. 
But it was.
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Make it an even $2.00.
The OP aside, I have not asked for a lot of help on this thread. Mostly this has just been reporting about an ongoing side hustle.
However, this is another request for help, if you can:
Owing to an existing, but mostly dormant, banking relationship with BBVA I am in the process of becoming a PNC customer. On chance you are unaware, PNC is currently swallowing BBVA.
Anyway, I notice PNC offers one month CDs, the holy grail for those such as myself who engage in “buy CDs with a credit card” activity.
If you happen to be an existing PNC customer, please tell me:
Does PNC allow online purchase of CDs with a credit card?
Thanks
- The shortest term it would let me select when opening online was 3 months.
- It would not let me get to the funding options until I actually submitted my application for the CD, so I wasn’t able to see if it could be funded with a credit card or not.
- Not that the rate really matters for your hustle, but I couldn’t even find their CD rates on their website.
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Understood. Thank you much appreciated. Guess I will just have to wait until the PNC acquisition of BBVA is further along to get my answers, though it is a bit concerning that you did not see the one month CDs. According to Ken, PNC has them available . . . but perhaps not for online purchase. 
Yes, you are correct. For the sake of this side hustle the interest rate of the short CDs being purchased does not really matter. And besides, the tiny amount of interest you earn that way is taxable. 
Locating one month CDs (twelve multiplier), or even two month CDs (six multiplier), available for purchase online with a credit card is akin to discovering a gold mine. But, like gold, those things are a tough get.
I’m pretty sure I tried and failed. But I cant specifically recall doing it, so I’ll give it a shot this week.
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The short answer:
They didn’t in 2014/15. I haven’t tried since then.
The @shinobi answer:
I had a couple of neighbors that were competent/successful/pleasant in PNC’s commercial banking. They were pretty bright go-getters and I figured that, given the right incentive/opportunity, PNC might be a decent bank to deal with.
My minimal experience with PNC was less than optimal. I am overly patient/pleasant/friendly when trying to establish an account or get a service/favor. Their front-line personnel (on multiple occasions) seemed to be the epitome of %#&$ hires - difficult to understand, could barely read their script, and (fortunately) were happy to pass you to someone else when they couldn’t understand your question. After a couple of attempts, I decided that any benefit (whatever it was at the time), was not worth the potential headaches.
OTOH, if you find they’ll do 30-day CDs with CC funding, I’ll happily give them another shot. Maybe they’ve even upped their standards/training for intial hires.
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As most everyone here already is aware, Alliant is rolling out changes to the terms of the Alliant Visa Signature card. This situation has caused me, once again, to review the Alliant Visa Signature boilerplate. That Alliant card is an important one for me where this side hustle is concerned. After all, it offers a 2.5% reward.
Anyway, this latest review of the Alliant terms and conditions has caused me to become skittish about my handling of CD purchases vis a vis Alliant Visa Signature. Maybe I’m just getting chicken as old age advances. I dunno. But I have given what I’m doing more thought. To lay it out for you in black and white:
So there I go charging this or that CD purchase, with the counterparty financial institution named in plain sight, to my Alliant Visa Signature. Then, just three months later, back comes almost the same amount of money into my Alliant checking with the name of that same sending financial institution once again in plain sight.
Anyone examining this at Alliant is gonna be suspicious. And we all know how anxious Alliant is to eject members even without cause!
Why should I offer them an engraved invitation to throw me out!
The obvious answer to this situation is for me to launder the money before it returns to Alliant. Temporarily the plan is to use Ally Bank as my laundry. There will be a “cleaning fee” in the form of delayed access to funds from CDs which have matured. Ally Bank sucks in that they do not offer overnight ACH. But payment of a nominal cleaning bill is preferable to being unceremoniously booted out of Alliant Credit Union.
Course going forward Alliant will be seeing a stream of money coming into my Alliant account out of Ally. But they will not know where it really is originating.