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How Did Facebook Make $1 Billion In 2012 But Pay No Taxes?

Submitted by on February 20, 2013 – 11:26 am5 Comments
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Did you file your federal and state taxes yet this year? If not, you might want to get on it. Technically, you’ve still got a couple months left before they have to be done. But, the longer you wait to do them, the more pressure you’re going to be under to get them done quickly. So, get on ‘em now before it’s April 14 and you’re staring at a stack of paperwork and receipts on your desk! Trust us, you’ll thank us later.

Fortunately, Mark Zuckerberg doesn’t have to worry about Facebook‘s taxes anymore this year. He had some of his accountants do them earlier this year, so he’s already all squared away with the IRS. But, that’s not the only thing he doesn’t have to worry about this year. He also doesn’t have to worry about actually paying any taxes for Facebook. That’s because although the social networking site raked in a cool $1 billion in 2012, Facebook won’t have to spend a cent on taxes. In fact, Zuckerberg & Co. will actually get a refund of about $429 million soon! How crazy is that?!

If you’re wondering how in the world it’s possible for a company to make a ton of money and avoid having to pay taxes, it’s due to the fact that Facebook had a bunch of employees cash in the stock options that they have in the company last year. And, because the U.S. government considers the cash they receive in exchange for their stock options to be “wages,” Facebook will receive a very large deduction for every stock option that was cashed in last year.

“The employees cash in stock options,” Robert McIntyre, a representative for the Citizens for Tax Justice, said recently, “and, at that point, there is a tax deduction for the company. Usually, it doesn’t wipe out companies’ whole tax bill, although many companies get big breaks from it.”

So, there you have it. No taxes for Facebook! Mark Zuckerberg wins again. How does that make you feel?

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