Facebook Gets $429 Million Tax Refund

Mark Zuckenberg

As you prepare to meet the April deadline for filing your income taxes, here's a little nugget to take with you while you do your calculations.

Despite earning over $1B in profits last year, Facebook paid $0 in federal and state taxes, and will get a refund totaling $429M, thanks to tax breaks.Because of the way Facebook treats stock options distributed to investors and employees instead of cash compensation on its balance sheets, the company is able to claim paying a tax liability worth hundreds of millions of dollars when the reality is they're getting paid:

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.)
 

You can get a detailed explanation in Bloomberg Businessweek, if you're interested.

This is what you hear the President talking about when he speaks to the need for tax reform. Some imply that the campaign contributions that lawmakers (and the President) get go a long way to keeping them from ever getting serious about tax reform. Did I hear someone say "Country First"?

Oh, by the way, Zuckenberg bought a seven million dollar house in Silicon Valley just ten miles from his  company's Menlo Park campus. His mortgage rate is 1.05 percent.  Life is grand for some folks!