On $1 billion profit, Facebook paid MUCH less than nothing in taxes

From Citizens for Tax Justice:

“Earlier this month, the Facebook Inc. released its first “10-K” annual financial report since going public last year. Hidden in the report’s footnotes is an amazing admission: despite $1.1 billion in U.S. profits in 2012, Facebook did not pay even a dime in federal and state income taxes.

Instead, Facebook says it will receive net tax refunds totaling $429 million. Facebook’s income tax refunds stem from the company’s use of a single tax break, the tax deductibility of executive stock options. That tax break reduced Facebook’s federal and state income taxes by $1,033 million in 2012, including refunds of earlier years’ taxes of $451 million.

But that’s not all of the stock-option tax breaks that Facebook generated from its initial public offering of stock (IPO). Facebook is also carrying forward another $2.17 billion in additional tax-option tax breaks for use in future years.

So in total Facebook’s current and future tax reductions from the stock options exercised in connection with its IPO will total $3.2 billion.”

To review:

Facebook makes a billion-dollar profit.

Facebook executives cash out billions of dollars in stock options (money taxed at the 15% capital gains rate).

Taxpayers then cough up an additional $429 million paid to Facebook, which because of its generosity to its own executives won’t be paying state or federal corporate income taxes for years to come.

– Jay Bookman

352 comments Add your comment

Keep Up the Good Fight!

February 15th, 2013
12:30 pm

So Facebook is the 47%

stands for decibels

February 15th, 2013
12:32 pm

But Jay. Consider all the tangible, hold-in-your-hand, STUFF this nation gets in return from Facebook.

oh, wait.

getalife

February 15th, 2013
12:32 pm

Moocher.

No wonder our President wants tax reform.

Keep Up the Good Fight!

February 15th, 2013
12:34 pm

Facebook is not done….they will ultimately use the tax deductibility of executive stock options for tax deductions of $3 billion

stands for decibels

February 15th, 2013
12:34 pm

Zuck had better double, no, triple his security detail.

(Ok, problem solved.)

Common Sense isn't very Common

February 15th, 2013
12:35 pm

Jay

I want an IPO and tax breaks wwwwwwwwwwwaaaaaaaaaaaaaaaaaaaaahhhhhh

:-(

East Lake Ira

February 15th, 2013
12:35 pm

Yet another reason to hate FB.

larry

February 15th, 2013
12:36 pm

And one of their co-founders renounces his citizenship just so he dont pay taxes?

I’m sorry, but just damn!!

Keep Up the Good Fight!

February 15th, 2013
12:37 pm

And in Georgia, that new senate buffoon Beach has introduced a bill to eliminate GA income taxes.

Corbin Sharpe. I think, therefore I am...I think.

February 15th, 2013
12:38 pm

JAY,
I hope you posted this on Facebook…

Doggone/GA

February 15th, 2013
12:44 pm

One of my goals in life is to die never having even been to Facebook, let alone having a presence there. Heck, my sister has a page there and I’ve never even seen it. (To be honest, I did try once, but it wanted me to login first)

Class of '98

February 15th, 2013
12:45 pm

No wonder Zuckerberg loves Obama so much.

F. Sinkwich

February 15th, 2013
12:46 pm

Okay, I give up. The point of this particular blog is what?

Doggone/GA

February 15th, 2013
12:47 pm

“Okay, I give up. The point of this particular blog is what?”

To annoy you

southpaw

February 15th, 2013
12:48 pm

Google and Ask have been no help with this so far. One question worth asking:

How much of the $429 million is tax that Facebook actually PAID in earlier years and is now getting back?

JohnnyReb

February 15th, 2013
12:48 pm

Can you say – Flat Tax?

Keep Up the Good Fight!

February 15th, 2013
12:48 pm

ODS causes delusions that Obama wrote the tax code.

stands for decibels

February 15th, 2013
12:48 pm

Okay, I give up.

Good. Please leave a forwarding address, and Jay will forward the stuff he’d had fumigated/disinfected.

Peadawg

February 15th, 2013
12:49 pm

Welcome to the 47%…

getalife

February 15th, 2013
12:50 pm

“No wonder Zuckerberg loves Obama so much.”

He is campaigning and fundraising for christie liar.

Peadawg

February 15th, 2013
12:50 pm

“Okay, I give up.”

Finally

getalife

February 15th, 2013
12:51 pm

We need laws to stop banks, corporations and the mic from robbing the Treasury.

It costs trillions.

Class of '98

February 15th, 2013
12:53 pm

“And in Georgia, that new senate buffoon Beach has introduced a bill to eliminate GA income taxes.”

Yeah we’d be dumb to follow the example of other states with relatively booming economies like South Dakota, Texas and Florida which have no state income tax.

That would be just stupid. Georgia should hike up state income tax rates to about 25%. Even the dumpster fire of a state known as California would be put to shame by that!! Imagine all of the food stamps we could buy with that money!! All of our problems would be solved!!

F. Sinkwich

February 15th, 2013
12:54 pm

Since no one else knows what the point of this blog is either, it’s interesting I’m the only one to admit it.

Finn McCool (The System isn't Broken; It's Fixed)

February 15th, 2013
12:55 pm

Thanks the huge market for accountants, tax advisors, and money managers in the good ole USA.

It’s a mighty powerful lobby.

Doggone/GA

February 15th, 2013
12:55 pm

“Since no one else knows what the point of this blog is”

You’ve already been told. It’s not MY fault you don’t like the answer

King of Planet Kolob

February 15th, 2013
12:55 pm

THEY ARE OVER-TAXED AND OVER-REGULATED !

getalife

February 15th, 2013
12:56 pm

filky,

The point is they are mooching.

It was a bfd last cycle silly.

Steve

February 15th, 2013
12:57 pm

You read, on these blogs, so many “conservatives” wailing about the abuse of welfare, using racist code words, etc. Why don’t they wail about the real abuse of our tax dollars – corporate welfare and the coddling of the wealthy? Most of these “conservatives” that post here are middle class or below.

Doggone/GA

February 15th, 2013
12:57 pm

“The point is they are mooching.”

A prime example of the takers that have to be supported by the makers

Thomas

February 15th, 2013
12:59 pm

Jay- you are jumping to a conclusion that a (incentive) stock option is similar to a carried interest in PE. Simply not true as stock options have an alt min aspect and the character is dependent on the holding period and method of disposition. There is also a side to a (technology) start up risk taking of time whereby the start up tech company cannot pay cash comp (unlike the cash rich gov’t sponsored green energy ponzi scheme companies). I hear the we are going to do more- you should promote yourself as a “green energy blog” and get your share of taxpayer money handed to you.

Anyway- why bother- you are strong on local issues and travelin’ music so bring it on.

Steve

February 15th, 2013
1:00 pm

Class of 98 – I lived in NH with no state income tax. We had tourism there, which contributed to our tax base. AND high real estate taxes. you take away the state income tax and TRUST ME, you get hit elsewhere. Florida gets it with tourist dollars.

Peadawg

February 15th, 2013
1:00 pm

So is Facebook considered one of the ‘takers’??

King of Planet Kolob

February 15th, 2013
1:01 pm

The loopholes are now gaping holes in our budget. Plenty more corporations doing this but their names did not make the news. We need to take our country back from tax dodgers. All taxpaying citizens are equal, but some are more equal than others.

ATL Tiger

February 15th, 2013
1:02 pm

No surprise. Our tax code needs to be simplified, new lower income tax brackets and ending deductions.

This may not happen for some time, and until then we will continue to see the effects of cronyism.

East Cobb RINO, Inc (LLC)

February 15th, 2013
1:03 pm

And yet one of the FB co-founders determined the tax burden was so heavy he left the country. Poor billionaire.

Mick

February 15th, 2013
1:03 pm

The point is if a corporate entity makes a profit, pays no taxes, then gets a nice gov’t rebate check, doesn’t that make them a taker on a much larger scale??? If you can’t see that, then go ahead and keep carrying their water, they love you for it..

Thomas

February 15th, 2013
1:03 pm

btw in your fervor to be all things liberal you are missing the latest way to legally insider trade- Ackman shorts Herbalife. Makes a ton of $. Icahn then comes in a buys at a low point and makes tons of $. I am sure they didn’t plan that. Meanwhile the retail investor is tossed around like a cork in the ocean.

stands for decibels

February 15th, 2013
1:03 pm

So is Facebook considered one of the ‘takers’??

Well, they sure as sh-t don’t make anything. But neither do the banksters, and they’re a protected class–more free money than they know what to do with.

so, why not Zuck & co. as well.

jconservative

February 15th, 2013
1:03 pm

“Okay, I give up. The point of this particular blog is what?”

Simple. To create a grassroots movement to demand that Congress reduce the corporate tax rate.

Keep Up the Good Fight!

February 15th, 2013
1:03 pm

Since no one else knows what the point of this blog is either

In its advance ODS stages, when a patient is completely beyond all hope, the brain ceases all functioning but the fingers type mindlessly. This is known in medical science as the Headless Chicken effect. It often includes a claims to know what others know as if the mindnumb allows the patient to suck the brainwaves of others in a zombie like fashion.

factsnot emotions

February 15th, 2013
1:03 pm

Good point Thomas… The main point is that FB, via being generous with stock options created wealth for their employees via their IPO…the employees paid billions in taxes since they recognized all of this income from the options. FB receives a corresponding compensation deduction from issuing the options to the employees and that event wiped out their taxable income. If FB had not been generous to their employees then no option deduction would have existed and FB would have paid billions in taxes instead of their employees. Most progressives give corporations hell for not paying enough and when they do in a situation like this, they are still giving them hell.

http://money.cnn.com/2012/05/09/technology/facebook-tax-bill/index.htm

stands for decibels

February 15th, 2013
1:04 pm

tossed around like a cork in the ocean.

Those who put us there are… corksoakers?

getalife

February 15th, 2013
1:05 pm

I thought tax reform will give us more corporate welfare but it is very obvious it needs reform to lower our deficit.

F. Sinkwich

February 15th, 2013
1:06 pm

Have they broken the law?

Nope.

If you were a stock holder, would you not want them to take advantage of every deduction they can?

Yep.

Monty

February 15th, 2013
1:06 pm

I think Obammy should sieze all of Facebooks wealth by executive order and redistribute it giving ZSuckerberbg a mere pittance. That would serve that dirty capitalist for not paying his “fair share!” His wealth alone could probably dig us out of this debt crisis or at least run the govment for a few minutes. Seize the guns and the profits!!!! I wonder how many people he employs and how much all the employees pay in taxes(not enough, I’m sure, right?) and how other companies benefit and hire people based on his company. It’s all inter-related and when you burden one company, it affects all others related to that company. Let’s tax and spend our way out. Viva la Greece!

southpaw

February 15th, 2013
1:07 pm

Peadawg, Doggone, & getalife

Are they “taking” anything they didn’t already “make?” If not, they aren’t “mooching.”

Real Scootter

February 15th, 2013
1:08 pm

Since no one else knows what the point of this blog is either, it’s interesting I’m the only one to admit it.

sinkwich,the point of this blog is-we need to tax the rich more- :shock:

stands for decibels

February 15th, 2013
1:09 pm

I think Obammy [sic]should sieze [sic] all of Facebooks [sic] wealth by executive order and redistribute it giving ZSuckerberbg [sic] a mere pittance

thanks.

Hey, F. Sink? Since you’re apparently not leaving, thought you’d appreciate this clear-headed take on the Real Purpose of This Here Blog Post.

Lance in Carrollton

February 15th, 2013
1:10 pm

I agree Jay! Close loopholes, rewrite the tax code, and lower mariginal tax rate for all Americans. Did you vote for Mitt Romney?

Tealiban Party

February 15th, 2013
1:11 pm

F. Sinkwich
Okay, I give up.

Thank you, thank you Jay. It has been a long time in trying but you have finally succeeded!

stands for decibels

February 15th, 2013
1:12 pm

Close loopholes, rewrite the tax code, and lower mariginal tax rate for all Americans.

+

???

=

PROFIT!

Matt

February 15th, 2013
1:12 pm

This reason that they are showing a billion dollar profit while not paying taxes is all related to timing….for financial reporting purposes under generally accepted accounting principles the expense is reported when the executive stock options are vested. For tax purposes, the company is not allowed a deduction on nonqualified stock options until the stock is exercised and is thus taxable to the executive (at ordinary income rates). The only lesson that we seem to be learning here is that there can be timing differences (sometimes quite significant ones) between financial reporting to investors and reporting to Uncle Sam.

Steve

February 15th, 2013
1:13 pm

No, leave the wealthy ALONE! Let’s take food away from poor kids. They are the real takers.

saywhat?

February 15th, 2013
1:14 pm

We need to raise taxes on the poor, or make cuts to their healthcare, to make up the lost $429 million being paid to facebook and their executives. After all, its not fair to punish success.

Nobama

February 15th, 2013
1:16 pm

Saywhat – I concur

Jefferson

February 15th, 2013
1:16 pm

Sunshine !!!

Monty

February 15th, 2013
1:16 pm

getalife

February 15th, 2013
1:17 pm

Stop crying about our deficit then cons.

barking frog

February 15th, 2013
1:18 pm

and because of this income tax they are paying they are considered
people and get to donate money to political pacs and super pacs
and candidates.

Steve

February 15th, 2013
1:18 pm

Let’s also force retirees to retire at 75 to claim the social security they paid into…and then we need to CUT TAXES MORE ON CORPORATIONS (they are people and have rights too, you know).

Peadawg

February 15th, 2013
1:18 pm

Keep, I asked you on the earlier thread and didn’t see an answer…

What does ‘ODS’ mean?

Sagegirl

February 15th, 2013
1:18 pm

If “Corporations are people, my friend”, then why aren’t they paying taxes?

driveby

Redneck Convert (R--and proud of it)

February 15th, 2013
1:18 pm

Well, what I want to know is, how do I get some of them stock options and the deduction for them? I don’t care much for Facebook, it’s just another way for people to show their rear end to everybody in the world, but I sure could use a way to get out of paying any taxes for the rest of my life. I promise to carry the deduction forward—or backwards, for that matter.

Wasn’t it Facebook that the South Africa cripple amputee used to brag about how good a shot he was, right before he accidently shot his girl friend four times? “Bang—oops. Bang—oops. Bang—oops. Bang—oops.”

Anyhow, have a good Friday everybody. I got to deal with Lowe’s for awhile. I ordered 2 6-shelf wire shelving units. They delivered 6 2-shelf plastic shelving units. Could of happened to anybody. Natural mistake. Them numbers get so hard to remember Dumb sh-ts. I’ll be checking in later on FNM. I sure hope somebody plays Don Mclean. I reckon he’s got over the speeding ticket he got in Connecticut by now. You’re just asking for it when you drive 45 mph in a 20 mph school zone.

Tealiban Party

February 15th, 2013
1:19 pm

Class of ‘98
February 15th, 2013
12:53 pm
Yeah we’d be dumb to follow the example of other states with relatively booming economies like South Dakota, Texas and Florida which have no state income tax.

Booming economies? In 2011 Texas had a 3.3% growth rate (mostly low wage service jobs), Florida 0.5%, and ND 7.7% which is being fueled by shale oil. California growth was 2.0%, Georgia at 1.7%. Perhaps GA should aim low – and try to match the growth of California.

DownInAlbany

February 15th, 2013
1:19 pm

Another good reason to restructure the tax code!

alex

February 15th, 2013
1:19 pm

@Lance, agreed, The Economist suggests eliminating the deduction on mortgage interests, any of you homeowners for that? NOT cave,”keep up the good fight”, home owners……only. You and GT are on the same “mindwave” frequency.

Steve

February 15th, 2013
1:20 pm

You can’t reduce the deficit AND starve government, Confederates.

getalife

February 15th, 2013
1:20 pm

pea,

Obama derangement syndrome.

You should know this by now.

Tealiban Party

February 15th, 2013
1:20 pm

Heres the link:

http://www.bea.gov/newsreleases/regional/gdp_state/gsp_newsrelease.htm

By region, the conservative South grew just 0.9%, worst in the nation…. but it’s all Obama’s fault, we know….

F. Sinkwich

February 15th, 2013
1:21 pm

Don’t confuse these people with facts, Matt. It messes with their worldview.

Peadawg

February 15th, 2013
1:21 pm

Thanks Keep.

Keep Up the Good Fight!

February 15th, 2013
1:22 pm

stands for decibels

February 15th, 2013
1:22 pm

What does ‘ODS’ mean?

Peadawg, years ago, (maybe 2005?) conservative columnist Charles Krauthammer somewhat lightheartedly wrote of what he termed “Bush Derangement Syndrome” he saw in Bush’s more vociferous liberal critics.

Many conservatives seemed to take that somewhat literally and accused liberals of it, well, liberally.

“ODS” is of course “Obama Derangement Syndrome,” i.e., lefties tossing the term back ad conservative who seem to be over-reacting in their displeasure for the current Administration.

Hope that’s clear now.

(I am trying to play this one down the middle, how’d I do?)

Monty

February 15th, 2013
1:23 pm

Anyone on here offered the opportunity to go to work for Facebook(with stock options) in hindsight would jump at the opportunity. Don’t say you wouldn’t. You would be proud if one of your kids got a job there(in hindsight). You’re just spouting leftist rhetoric, and you’re being hypocritical. It’s not becoming.

getalife

February 15th, 2013
1:23 pm

Lets recap, cons are for banks, corporations and military industrial complex welfare that cost trillions but want to cut any programs that helps poor Americans or the middle class..

Stay the course cons.

stands for decibels

February 15th, 2013
1:23 pm

“back AT conservatives”… jeez. I suck at this.

Steve

February 15th, 2013
1:24 pm

Tealiban – we have the lowest taxes on corporations! We white wealthy are thriving in the South! YOU LIE! You must be some northern carpetbagger!!

That Black Guy

February 15th, 2013
1:24 pm

So is Facebook considered one of the ‘takers’??

Well, they sure as sh-t don’t make anything
_____________________
Kinda like lawyers.

Peadawg

February 15th, 2013
1:25 pm

(I am trying to play this one down the middle, how’d I do?)

Yes, good job.

Thomas Heyward Jr

February 15th, 2013
1:25 pm

“Taxpayers then cough up an additional $429 million paid to Facebook, ”
.
You lie.
Taxpayers don’t……… “cough up” nothing.
.
Tax-payers are FORCED to disgorge wealth at the tip of a gun by the State.
Facebook doesn’t FORCE anyone to do anything with anyone’s wealth.
.
Who’s the bad guy?
.
Pansies.
.
Who’s the bad guy?

getalife

February 15th, 2013
1:25 pm

Next, they will offshore jobs for cheap labor and the cons will cheer that too.

stands for decibels

February 15th, 2013
1:26 pm

Anyone on here offered the opportunity to go to work for Facebook(with stock options) in hindsight would jump at the opportunity

And this means that those same people can’t be critical of stupid tax policy, nor of foolish political rhetoric aimed at demonizing the “moocher” class?

Please go sell this iteration of “Al Gore is FAT!” somewhere else.

weetamoe

February 15th, 2013
1:27 pm

Kinda like Warren Buffett’s taxes. Buffett created *foundations* for his kids and funded them generously, claiming that his children would spend the money more wisely than the government would. Buffett has also been fighting the IRS over millions or more in assessed taxes that he refuses to pay. He and Obama created this cute little gimmick they call the *Buffett Rule* meaning our friends are not subject to the same laws as regular folks and we got to protect billionaires from those uppity millionaires who want to increase their wealth.

barking frog

February 15th, 2013
1:28 pm

That Black Guy
Kinda like lawyers.
………………………………….
Cheney woulda shot them in the face….book..

CPA

February 15th, 2013
1:28 pm

Stock options are taxed at ordinary tax rates (the FMV of the stock less the exercise price) immediately upon exercise and is flowed through the employee’s W-2. If the employee chooses to hold onto the stock, the capital gains tax rates apply to the appreciation of value from the FMV at the date of option. The stock holder has to then hold it for at least one year and one day. There is a giant difference between financial accounting and tax accounting with very large corporations. Financial accounting has a lot of various rules which allow companies to inflate revenue and defer expenses. Tax accounting is mainly focused on cash basis transactions with adjustments for reserves (Reserves are solely for financial accounting).

southpaw

February 15th, 2013
1:28 pm

sfd@1:22
If “down the middle” is anything like “factual” or “objective,” you did great.
Here’s hoping the “how’d I do” wasn’t addressed just to Peadawg.

Monty

February 15th, 2013
1:30 pm

No SFD. Let’s focus on Watergate(Rubio). LOL!

Thomas Heyward Jr

February 15th, 2013
1:30 pm

Even if Facebook DID pay taxes……….it wouldn’t be enough for progs.
Not a wimper on this……….today…………one of thousands of “programs” …….funded……….”at the tip of a government gun”————
(it’s only 42million dollars)———–.
“A bill was just introduced in the Senate, S.252, called the Prematurity Research Expansion and Education for Mothers who deliver Infants Early Reauthorization Act. Still trying to find authorization for it somewhere in my copy of the Constitution. Yet, it is certainly likely to pass. Now, this is a rather insignificant bill that the CBO estimates will cost “only” $4 million in 2014 and $42 million over the 2014-2018 period. But it illustrates the complete and utter disregard that Congress (Democrats and Republicans) has for the Constitution and for controlling spending.”
.
lol

stands for decibels

February 15th, 2013
1:31 pm

Kinda like lawyers.

Yep. Thing is, it seems perfectly OK for folks from both sides to take pot shots are the legal profession–who hasn’t made a lawyer joke?–but there are all manner of skimmer-class service-industry folk who are more or less immune.

And yes, I do recognize the value in software development, and obviously Facebook isn’t simply a cannibalistic enterprise (although it certainly can seem that way). But this notion that all Captains of Industry are brave entrepreneurial souls who shouldn’t have mean things said about them when they’re clearly playing us, is ridiculous.

and yes I know I’m probably preaching to the choir here.

Steve

February 15th, 2013
1:31 pm

Imagine if this cruise ship that got stranded was a government run situation? You cons would be all over it. But this is private industry gone BAD. These cruise ships fly the flags of countries with very little regulation, lowering cost but increasing the chance of things like…fires in the boiler room leading to poop in the hallways.

American Christian & Patriot!

February 15th, 2013
1:33 pm

Their corporate tax should have been ZERO in the first place.

Thomas Heyward Jr

February 15th, 2013
1:34 pm

Every dollar less that Facebook paid in taxes is…………………………………less money that the state can spend on HellFire missiles.
.
For those still able to feel, and have a shred of decency left………………………………..Isn’t this a good thing?

Lance in Carrollton

February 15th, 2013
1:34 pm

Steve

February 15th, 2013
1:20 pm
Confederates.

Not all who disagree with your philosphy want to break apart and form a government that is based on a system of government with a weak, ineffectual federal government and strong state governments. What most conservatives I know want is a government that works. I think that the federal government should cease its growth and allow the country to grow to the size of the government as it exists now. This is not a new concept; in Bill Clinton’s 1996 State of Union address, he stated that the “era of big government is over.” Following this pronouncement, Bill Clinton and the Republican controlled congress enacted Welfare Reform and the Balanced Budget Act leading to a bueget surplus in 2000.
Maybe, and I may be looking at this from a political lense, Republicans are coming to the negotiating table from their own point of view and Democrats are coming to the table with their own point of view but not coming to agreement. Normally during these negotations you should find yourself at a point where concessions are made and governence occurs. The problem that I see is that because of 24 hours news coverage that any concessions leads to a Republican to be called a RINO. This hurts our form of government because opinion is accepted as fact by a large portion of the base of the Republican party. The Democrats hurt their standing a lot by coming to the negotating table with Centrist views and Republican attempt to pull them further right.

dixie normous

February 15th, 2013
1:35 pm

bookman doesnt care about the money from taxpayers that barack has flushed down the toilet.

Workers at a Michigan battery plant built with a $150 million federal stimulus grant but never opened played games and watched movies while their wages were paid for by U.S. taxpayers, according to a government report.

South Korea-based LG Chem, which used the grant money to build a factory that was supposed to make batteries for the Chevy Volt, has paid back $842,000 in wages it improperly billed to the government, but still has no plans to start production in the facility or return the grant. The company makes Volt batteries at another plant in South Korea.

Ken

February 15th, 2013
1:36 pm

Don’t blame Facebook. Blame Washington. Facebook it just going by the IRS rules.
How many of you write you Congressman or Senators ? Write NOW !!!!!!!!!!

Dumb and Dumber

February 15th, 2013
1:37 pm

Oh, a few factual errors. Incentive Stock Options are the only options that do not have automatic taxable income on the date of exercise, up to $100,000 per year (non qualified options are ordinary income to the person exercising on the date of option-the income is reported on the employee’s W-2 to the extent the the options are in the money). So…..the person has taxable income (and aren’t they in California) at 35% fed and 9-10% California (now 39.6% and 13.3% California), not capital gains. They then have to sell the stock to pay the 40-50% tax. They would only get ‘long-term capital gain treatment’ (15% quoted rate) if they exercised the options and piad taxes at time and held stock for a year. The company is normally also required to withhold 28% tax on the exercise date for Feds.

Stock options are compensation to employees/execs. Employee records income and company expense, just like a salary. This is no different unless the person has an ISO (few do, and amounts are limited per year, with remainder becoming non qualifieds if exercised).

And the ISO holder can exercise $100k per year of options and potentially face AMT tax anyway.

But don’t let facts get in the way of a good piece. Facebook didn’t pay taxes because they did not have TAXABLE income, if they received money back, that is because they paid it in prior years and can claim a refund.

What do you suggest, that stock options should not be taxable? Please, that’s one of craziest things I’ve ever heard.

Fred ™

February 15th, 2013
1:37 pm

Oh it gets better than this. Don’t forget that co-founder, Eduardo Saverin, renounced his US citizenship so he wouldn’t have to pay the 15% capitol gains tax.

Laughing and skipping all the way to the bank. Let the wealth envy Republicans come on and defend this tragedy while calling for kids born to poor people to die.

Keep Up the Good Fight!

February 15th, 2013
1:37 pm

And yes, I do recognize the value in software development, and obviously Facebook isn’t simply a cannibalistic enterprise (although it certainly can seem that way).

Nope they are a “repackager for profit of the private information of millions of individuals who voluntary disgorge the private information that they would scream if the government asked for it all.” :D

barking frog

February 15th, 2013
1:38 pm

Steve
Imagine if this cruise ship that got stranded was a government run situation? You cons would be all over it. But this is private industry gone BAD. These cruise ships fly the flags of countries with very little regulation, lowering cost but increasing the chance of things like…fires in the boiler room leading to poop in the hallways.
………………………………………………………………………
Nah, if it was a foreign country ship the Navy would’ve sent
an aircraft carrier……..