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.
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.
Personally I don't have a problem with this as long as it's legal. If you are legally entitled to tax deductions, reductions, rebates or favorable rates, there's nothing wrong with taking advantage of them.
Here's a funny video though.
CBSNewsOnline: President Obama was at Facebook's headquarters in California Wednesday for a town hall on budgetary issues. In response to a comment Mr. Obama made on how high-income Americans, like the founder and CEO of Facebook, should pay more in taxes, Mark Zuckerberg said "I'm cool with that."
Well, for anyone who follows them closely - they are pro-abortion. Among other actions, they've restored a virtual do-it-yourself abortion kit to their site after removing it once.
So this should come as no surprise given their active support of the messiah.
Companies are getting so big that it's gotten to the point where one lobbyist can have the sole function of making life easy for just one company via the creation of unique loopholes. Legal, but highly unethical.
It goes over just fine. They deduct all that non-cash stock comp expense and use NOLs to offset the tax they would otherwise pay. Another reason why we shouldn't work ourselves us so much about a few percentage points in the cap gains or income tax rates for all those employees.
No, the reasons we should worry about those points in the tax rate are entirely separate, not the least of which is the laughable futility of trying to tax our way to a balanced budget at nearly a quarter of GDP as government spending.