While average Joes everywhere now see $200 less in their pay envelopes every month thanks to Obama’s reinstatement of the payroll tax, poor Mark Zuckerberg, the hapless billionaire that started Facebook and his buddies got a multibillion dollar tax break.
Obama preaches “fairness” in paying taxes; that being those with jobs should be taxed, and taxed, and taxed some more. Facebook is actually getting a $429 million tax REFUND.
Thank goodness for the fairness of our tax system, and the progressive idiots that hand out these massive benes for their friends in high places.
Facebook Gets a Multibillion-Dollar Tax Break
By Peter Coy on February 15, 2013
It hasn’t drawn much attention, but Facebook’s first annual earnings report contains an accounting gem: a multibillion-dollar tax deduction for the cost of executive stock options and share awards.
Even though Facebook (FB) reported $1.1 billion in pre-tax profits from U.S. operations in 2012, it will probably pay zero federal and state taxes—and even receive a federal tax refund of about $429 million—according to a Feb. 14 statement from Citizens for Tax Justice.
The tax-research and -lobbying organization says companies such as Facebook should treat stock options the same in their reports to shareholders as they do in their tax filings. Citizens for Tax Justice calls the tax footnotes in Facebook’s Jan. 30 financial statement “an amazing admission,” but there’s nothing illegal about the breaks the company is claiming. Companies like Facebook are allowed to treat the cost of non-cash compensation, such as stock options, as an expense that reduces profits, essentially the way they treat cash compensation such as salaries.
The difference is that Facebook—unlike, say, General Motors (GM)—relies heavily on stock options and restricted stock units as a form of compensation. It paid out a lot during its years as a private company that it must now recognize on its income statement and balance sheet.
You won’t find any $429 million tax refund in Facebook’s financial statements. Indeed, the company says it had a $559 million federal tax liability in 2012. But that liability isn’t an actual payment. In a footnote, the company also said that it had a $1.03 billion “excess tax benefit” last year related to “stock option exercises and other equity awards.” That benefit is what flips the federal tax liability into a refund. (A small portion is applied against state taxes.)
Facebook says that it anticipates reducing its tax liability in the future by an additional $2.17 billion by using further net operating loss carry-forwards that it has banked.
Facebook spokeswoman Ashley Zandy declined to discuss the tax break but pointed to the transcript of Facebook executives’ conference call with analysts. On the call, Chief Financial Officer David Ebersman cited the accumulated tax benefits and noted that the company ended the fiscal year with nearly $10 billion in cash and investments, “giving us great flexibility and risk protection.”
http://www.businessweek.com/articles/2013-02-15/facebook-gets-a-multi-billion-dollar-tax-break
AWD says:
Well-loved. Like or Dislike:
8 
0
17th February 2013 at 6:27 pm
DaveL says:
MSM time spent on Bain Capital tax breaks….About 8 months.
MSM time spent on Facebook tax breaks….A fucking facebook nanosecond.
Well-loved. Like or Dislike:
15 
0
17th February 2013 at 6:43 pm
Mark Z says:
You whiny bitches are just jealous. Not only do I pay no tax, but I drive a nicer car than you, too. Blow me.
Well-loved. Like or Dislike:
15 
0
17th February 2013 at 7:44 pm
Novista says:
Didn’t I see that car in “The Last Starfighter”?
Like or Dislike:
2 
0
17th February 2013 at 8:45 pm
KaD says:
And I might even be able to fathom this *slightly* if Facebook was a company that produced a REAL product.
Well-loved. Like or Dislike:
7 
1
17th February 2013 at 9:07 pm
AWD says:
You might be able to fathom the “tax fairness” president giving a billionaire several more billions in tax breaks, and then a $429 million tax refund (from average working people aka “taxpayers”)? WTF?
Being an informant for the government has it perks
Well-loved. Like or Dislike:
9 
0
17th February 2013 at 9:23 pm
NoEffingWay says:
Hey Mark,
Your “Wife” is smoking.
Like or Dislike:
4 
0
17th February 2013 at 10:10 pm
John A says:
Gold Diggers of 1933 – “We’re in the Money” Take it away, girls !!!
http://www.youtube.com/watch?v=UJOjTNuuEVw
Like or Dislike:
1 
0
17th February 2013 at 5:36 am
John A says:
Facebook sucks.
Well-loved. Like or Dislike:
5 
0
17th February 2013 at 6:05 am
John A says:
“If I had a son, he’d look like Mark.”
Like or Dislike:
3 
0
17th February 2013 at 7:05 am
AWD says:
Pay your fair share, or the alternative tax (whatever democrats decide you should pay). Or, if you’re a billionaire, don’t pay any taxes and get a $429 million tax REFUND. Forward!
Well-loved. Like or Dislike:
5 
0
17th February 2013 at 9:52 am
AWD says:
Facebook, The Coolest Cutest Corporate Welfare Queen Of Them All
Wolf Richter http://www.testosteronepit.com
Last year, the government extracted $1.1 trillion in taxes from us more or less hardworking individual taxpayers. But now it will pay, along with the states, $429 million of our taxes to the coolest Silicon-Valley beauty queen: Facebook. In net tax refunds! Part of a vast package of juicy corporate welfare programs. Facebook isn’t just hogging our data; it’s gobbling up our money.
Timing was a bit inconvenient, however. The “sequester,” as the automatic spending cuts by the federal government have been elegantly named, is scheduled to kick in on March 1. A national disaster, according to the New York Times. It would threaten everything from national security to preschool programs for low-income kids. It would cause hundreds of thousands of jobs to evaporate, or whatever. Clearly, trying to live within one’s means, or at least a modest step closer to it, is never a healthy idea.
So, as the drama with all its lurid theatrics was playing out in Washington, Facebook filed its first 10-K annual report with the SEC, containing its financial statements for 2012 along with a host of small-print footnotes which presumably no one would ever look at. But the recalcitrant nonpartisan research and advocacy group, Citizens for Tax Justice, combed through it anyway.
And it found “an amazing admission”: despite $1.1 billion in pre-tax profits from its US operations in 2012, Facebook didn’t pay any federal or state income taxes in the US—in fact it will collect net tax refunds totaling $429 million.
Facebook is relying on a single tax break in our glorious corporate tax-dodge code to obtain its negative tax rate: the deductibility of executive and employee stock options. It cut Facebook’s federal and state income taxes by $1.03 billion last year—but that was just part of it. As Facebook said in its footnote under “Share-based Compensation,” on page 68 of the 10-K: “during the years ended December 31, 2012, 2011, and 2010, we realized tax benefits from share-based award activity of $1.03 billion, $433 million, and $115 million respectively.”
Another $2.17 billion of this US tax break is carried forward. To rub it in, COO Sheryl Sandberg giddily pointed out during the earnings call that the company “ended the year with a total of $5.8 billion in NOL tax loss carry forwards created by stock compensation”—to be used in future years.
Given Facebook’s anemic “profits” in the US, it’s unlikely that it will have to pay federal or state income taxes anytime soon. Instead, taxpayers will have to continue showering tax refunds on what has become the cutest, coolest welfare queen of them all [but it does have its share of not-so-real-world issues, like this one: Is The “Self-Promotion-And-Envy Spiral” Taking Down Facebook?].
On its financial statements, Facebook claimed that it had a federal tax liability in 2012 of $559 million, that it would somehow pay $559 million in taxes in the coming year. But the number was wiped out by its infamous footnote on page 68 of the 10-K. And suddenly, that “federal tax liability” of $559 million had, like so many things on financial statements, no graspable relationship to reality.
Facebook isn’t the only one sucking on the big government teat. The tax break is available to all companies where stock-based compensation plays a big role. And innumerable other tax breaks are available as well. In its Corporate Tax Dodgers report of November 2011, the CTJ found that 30 of the 280 most “profitable” companies for the tax years 2008-2010 paid no income taxes but instead collected net tax refunds on their combined pre-tax profits of $160 billion! And 78 of them had at least one year when they didn’t pay taxes. At the same time, other companies in the study were getting whacked by huge tax bills. Hence the inherent unfairness of the corporate tax-dodge code.
So, CEO Mark Zuckerberg was raving about the limitless opportunities of mobile during the earnings call. “We have more engagements from the people who we reach, and I think we’ll also be able to make more money for each minute people spend with us on their mobile devices,” he said. But it just won’t contribute to the convoluted and painful process of reducing the US budget deficit.
Like or Dislike:
3 
0
17th February 2013 at 2:41 pm
Mark Z says:
NoEffingWay – my wife is indeed smoking. If you had a few billion you could catch one like this, too:
But unfortunately you do not, so you are left with this:
Man, it must suck to be you.
Like or Dislike:
1 
0
17th February 2013 at 5:51 pm
Mark Z says:
WordPress sucks. Facebook doesn’t have these problems.
Like or Dislike:
2 
0
17th February 2013 at 5:52 pm
Mark Z says:
Maybe you can afford a butterface, tho, on your income:
Like or Dislike:
1 
0
17th February 2013 at 5:56 pm
Stucky says:
MarkZ
No way in hell would I throw the girl above out of bed. She is indeed a butterface ….. nice skin, nice figure, very nice tits …. everything is nice, but ‘er face.
Like or Dislike:
2 
0
17th February 2013 at 6:25 pm
AWD says:
Shut the fuck up, Donny
Like or Dislike:
2 
0
17th February 2013 at 6:58 pm
Gene says:
Isn’t some or most of this stock based compensation fully taxable when exercised or sold by the employee, effectively generating a tax windfall for the governments, both Federal and State?
Like or Dislike:
0 
0
17th February 2013 at 12:02 pm