Originally Posted by
tomgoodman
Some here may remember when the IRS proposed charging us personal income taxes on our passes, using the full coach fare as the imputed value. This was about 30 years ago, and a vigorous lobbying effort with Congress fended it off. It probably helped when Congressmen realized that such a plan might make some of
their perks taxable too.
This issue has come up quite a few times since then. The last time was just 4 years ago. It has taken a big lobbying effort and cash each time to beat it back. The current rule allows the exemption only for immediate family members. If you extend non rev passes to someone not meeting the IRS definition of immediate family then you have to pay the imputed value of the ticket in taxes. That is one reason for the charge on buddy passes. It avoids the imputed value tax. Some airlines don't charge for buddy type passes but in the end you pay about the same after taxes.