Facebook Likely To Pay No Federal Income Tax This Year, Despite $1 Billion In ...
Facebook's recent decision to go public may be a boon for the company in more ways than one.
Facebook is structuring its initial public offering in a way that will allow the company to sidestep federal and state income taxes on its 2011 earnings , according to a report from Citizens for Tax Justice, a nonprofit advocacy group focused on tax policy. In addition, Facebook expects to see about half a billion dollars come back in the form of tax refunds.
It's all thanks to the stock options Facebook is offering its employees -- 187 million stock options, to be exact.
Facebook staffers, including CEO Mark Zuckerberg, are expected to buy these shares at low prices this year and then exercise them once they hit a higher value. Because of the way the tax law is set up , whatever the difference is between the price of shares when the workers originally purchased them and their price by the time they are exercised, Facebook can deduct that amount from its taxes.
That's projected to bring in $7.5 billion in tax breaks for Facebook , including a $3 billion deduction from its federal and state income tax bill. In addition, Facebook will likely pay no federal or state income taxes this April, and is expected to get money back from the government on its 2009 and 2010 taxes to the tune of $500 million dollars.
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