Last year at this time, CTJ predicted, based on Facebook's IPO paperwork, the company would get a federal tax refund in 2012 approaching $500 million, and the company's SEC filing this month tells us we were right: Facebook is reporting a $429 million net tax refund from the federal and state treasuries. And it's not because they weren't profitable. Indeed, Mark Zuckerburg's little company earned nearly $1.1 billion in profits.
CTJ's new 2-pager on what Facebook's February 2013 SEC filing means is here.
Facebook's income tax refunds stem from the company's use of a single tax break, that is 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.
Of course, Facebook is not the only corporation that benefits from stock option tax breaks. Many big corporations give their executives (and sometimes other employees) options to buy the company's stock at a favorable price in the future. When those options are exercised, corporations can take a tax deduction for the difference between what the employees pay for the stock and what it's worth (while employees report this difference as taxable wages). On page 12 of our 2011 Corporate Taxpayers and Corporate Tax Dodgers report, we discuss how 185 other large, profitable companies have exploited the stock option loophole.
rest at http://www.ctj.org/taxjusticedigest/archive/2013/02/facebook_status_update_a_429_m.php
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