Rewards points from product manufacturers and how they are taxable
I receive points from product manufacturers throughout rewards programs. Essentially I submit proof of sales and they give me points for it that I can eventually cash in for discounts or products themselves. Im at a loss with how these are to be taxed. A quick look shows the IRS has guidelines for these points stating they are to be taxed at FMV when received not cashed.
But they have no fixed value or FMV, the company states they will issue a 1099 misc if you exceed 2000 usd, but what if I don’t? I cant tell if I should add redemption products to my 1040 on section 8I
The company states that they use their dealer price catalog to establish the value of redeemed items towards that 2000 threshold for 1099 misc.
For context I work for an approved dealer of these products. Not for the manufacturers who issue points.
For example, I may have enough points to redeem an item that has a retail value of approximately $300, but I cannot simply exchange the points for $300 in cash, transfer them to someone else, or necessarily redeem them for $300 of my choosing. The value only becomes apparent when I use the points for a particular reward.
My concern is how these points should be treated for U.S. federal income-tax purposes. Specifically, I want to determine whether receiving the points themselves constitutes taxable income, or whether taxation occurs only when the points are redeemed. If they are taxable when received, I am unsure how I could reasonably determine their fair market value because