As I understand it, the credit card gave him 5% back on purchases. He used his credit card to buy store cards, say for example 7-11 cards. He buys $1000 worth of 7-11 cards and gets $50 back from the credit card company. Then he goes to 7-11 and gets a $1000 money order using the gift cards. Then he deposits the $1000 money order back to his bank and pays his credit card bill. He essentially got $1000 for a net of $951 give or take. If you are an OCD type and have the resources you could theoretically bank many thousands of dollars a month doing this. Imagine if you could do this with $3000 or $5000 a day.
So of course the IRS will call that $49 per $1000 as income.
$6.4 mil in charges in two years.
A busy guy.
Thank you all. That was a tough read for me.
So the only rewards are from using the credit card. Everything flows from that...