Unused trip voucher taxable

[Squally]

After meeting with a salesperson to discuss their product my wife and I received a vacation certificate through another company. While we originally planned to use the certificate and sent in the form with the requested processing fee, complications with the company and our desires arose that caused us to cancel our contract and receive a full refund of the processing fee. In their terms and conditions, they have some statements that depending upon how I read them give different avenues in moving forward. They include a suggested free market value of the offer is $275, and It is called an “offer to sell travel” and “has no cash value.” 

My question is whether or not we owe taxes on the fair market value on the certificate since we have received it and started to use it before cancelling or if we owe no taxes as the long term effect is the same as if we never accepted the offer to begin with or never started to use it since unused it has no cash value. Or something else entirely.

[Vanessa A · Accepted solution]

It depends.  What does started to use it mean?

 You say you "started to use it", if this means that you received it and used it even if you did not fully use it, then yes, this would be considered taxable income for the portion that you did use. The fact that you received a refund though, sounds like you did not actually use it. 

If you received it, but did not use it, then no, it would not be taxable income.  

[Squally]

To redeem the certificate we needed to fill out a form which included things like the number people going on the trip, desired trip destinations and travel days, etc.,  for them to check availability and see if they could find accommodations for us with those requirements.

When I said “started to use” I meant that we had filled out that form and sent it in with the required $50 processing fee. They returned the form stating that we had not paid the correct amount for the number of people selected to go on our trip (we had not understood correctly as to when the payment for additional family members beyond the included 2 guests would be due). The company was difficult to be in contact with and at this point we had looked at reviews and found that other people had difficulty in dealing with the company in the past so at that point we decided to cancel and not continue with them and requested a refund of our processing fee, which we received a few weeks later.

[Vanessa A]

Ok, so then you didn't actually use it, so this would not be considered taxable income as you never received anything of value.