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On money

By HELEN HUNTLEY, Times Staff Writer

© St. Petersburg Times, published April 14, 2002

Business frequent-flier miles aren't taxable -- not yet

Business frequent-flier miles aren't taxable -- not yet

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Q. I read somewhere that frequent-flier miles earned through business travel might become taxable. What is the rule on this?

A. The general rule is that the miles are not taxable.

"The IRS has come out and said that they're not going to pursue it at this time," said John W. Roth, an analyst for tax information publisher CCH Inc. "What they're saying is that if you've used frequent-flier miles, this is not going to be an issue. But they left it out there that at any time they may say this is income."

The question was whether frequent-flier miles or other promotional awards earned as a result of business travel were taxable if they were used for personal purposes. The IRS says it hasn't figured out how to value the benefits and how to separate those earned through personal travel from those earned through business travel.

"Because of these unresolved issues, the IRS has not pursued a tax enforcement program," the agency said in a bulletin last month. The IRS said the relief does not apply to benefits converted to cash.

Frequent fliers who have questions can call the IRS long-distance at 1-202-622-4606.

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Q. Can you direct me to the place where I can get information on all Standard Oil Co. of New Jersey stock splits since 1948?

A. That would be the investor relations department of Exxon Mobil Corp., also known as ExxonMobil, the successor company to Standard Oil of New Jersey. Call toll-free 1-800-252-1800. If you are asking because you still own shares in Standard Oil of New Jersey, it is not too late to redeem them for ExxonMobil shares.

For more information about ExxonMobil and its history, check out the company Web site, www.exxonmobil.com.

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Q. When I retired, I rolled my 401(k) account into an individual retirement account. On the advice of my credit union, I kept this account separate from my other regular IRA. I would like to put these two accounts together. Because they were both funded with pretax dollars, it seems as if I could do this. Must they always remain separate?

A. Go right ahead and combine your accounts.

The reason to maintain a 401(k) rollover in a separate IRA is to keep everything tidy should you decide to roll the money back into a 401(k) plan at a future employer. Since you are retired, that's a moot point.

This can become an issue for people who have IRAs that include nondeductible contributions. The IRS does not permit after-tax contributions to be rolled over from an IRA to a retirement plan, and you wouldn't want to do it anyway.

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Q. I have a living trust written by an attorney here in Florida with all my properties registered in the name of the trust. If I move to another state would I have to have the trust rewritten?

A. Not necessarily. However, state laws vary on these matters. If you become a permanent resident of another state, it is a good idea to have your will and any trusts reviewed by a lawyer in that state.

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Q. Help! I don't think I can get my tax return finished on time. What should I do?

A. Mail in Form 4868 to request an automatic four-month extension of time to file your return. Ideally, you also should send a check for any tax due. But even if you don't have the money to send, be sure to send in a request for an extension. You can always send the money later, with interest, when you file your return. You also will have to pay a penalty if you do not pay at least 90 percent of your taxes by April 15.

Form 4868 can be filed electronically or by telephone. To file by phone, call toll-free 1-888-796-1074. Have a copy of your 2000 return handy.

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-- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.

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