quote:

ORIGINAL: kalikshama
For links and to read more, see http://www.forbes.com/sites/robertwood/2013/02/19/tax-increases-why-facebooks-billion-dollar-income-isnt-taxed-at-all-by-irs/

quote:

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.)

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quote:

ORIGINAL: JeffBC
So the way I'm reading this Facebook wanted to give a bunch of stock options to it's executives that it couldn't afford so the taxpayers have picked up the tab.
Hold on, I want to give some "stock options" to Carol to the tune of 30 or 40 million. I'm sure the IRS will be happy to allow me to deduct them, right? LOLOL

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quote:

ORIGINAL: OrionTheWolf
~FR~
The simple version
Facebook made 1.1 Billion Dollars in pre-tax profits.
Throughout the year Facebook entered a tax liability of $559 million.
Since they gave stock options to executives they were able to claim expenses which dropped their taxable profits and entitled them to $429 million refund.
By paying execs in stock options they were able to reduce their tax burden.
Now those stock options will be taxed when the execs make a profit on them, but it does raise a legitimate question on why this is allowed by corporations at all.
If I got this incorrect, then can someone tell me how much tax FB paid on the $1.1 Billion in profits?
BTW, it is not just FB that did this or does this, but many large American Corporations. I agree that the tax code needs to be revised on a massive scale.

quote:

When Facebook went public in 2012, it triggered vesting provisions in restricted stock units it had granted prior to January 1, 2011.
So Facebook and its employees got hit with a massive tax bill, all at once, for four years' worth of stock-based compensation. And Facebook wrote a big check to the government in November on behalf of its employees.
Facebook's annual 10-K report doesn't break out the exact amount, but said it incurred a $1.13 billion obligation related to stock-based compensation and related payroll taxes.


SOURCE

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quote:

ORIGINAL: OrionTheWolf
Since they gave stock options to executives they were able to claim expenses which dropped their taxable profits and entitled them to $429 million refund.

quote:

ORIGINAL: DesideriScuri

quote:

ORIGINAL: OrionTheWolf
~FR~
The simple version
Facebook made 1.1 Billion Dollars in pre-tax profits.
Throughout the year Facebook entered a tax liability of $559 million.
Since they gave stock options to executives they were able to claim expenses which dropped their taxable profits and entitled them to $429 million refund.
By paying execs in stock options they were able to reduce their tax burden.
Now those stock options will be taxed when the execs make a profit on them, but it does raise a legitimate question on why this is allowed by corporations at all.
If I got this incorrect, then can someone tell me how much tax FB paid on the $1.1 Billion in profits?
BTW, it is not just FB that did this or does this, but many large American Corporations. I agree that the tax code needs to be revised on a massive scale.

Not exactly. They paid for the vesting of stock options because of the IPO.

quote:

When Facebook went public in 2012, it triggered vesting provisions in restricted stock units it had granted prior to January 1, 2011.
So Facebook and its employees got hit with a massive tax bill, all at once, for four years' worth of stock-based compensation. And Facebook wrote a big check to the government in November on behalf of its employees.
Facebook's annual 10-K report doesn't break out the exact amount, but said it incurred a $1.13 billion obligation related to stock-based compensation and related payroll taxes.


SOURCE

So, all the money they are getting back ($429M) is the difference between what they have already paid in, and what the tax code states they are legally required to pay in ($559M).

If you got a refund from your taxes, this is the same thing. You paid in more than your legal obligation. You get the difference back.

quote:

ORIGINAL: DomYngBlk
Missing the point again. It is stipulated that it is in the tax code therefore owed back to FB. What is at issue is the hypocrisy of having it there in the first place as corporate welfare.

quote:

Facebook's annual 10-K report doesn't break out the exact amount, but said it incurred a $1.13 billion obligation related to stock-based compensation and related payroll taxes.
Additionally, Facebook withheld $2.86 billion in stock granted to employees to satisfy those employees' tax obligations. (This wasn't tax owed by or paid by Facebook; instead, Facebook withheld it from employees' compensation and paid it directly to the government, the way taxes are regularly withheld from paychecks.) Here's what Facebook said about that in its annual report:


We settled 279 million of Pre-2011 RSUs in 2012 of which 273 million RSUs were net settled by withholding 123 million shares, which represented the employees' minimum statutory obligation for each such employee's applicable income and other employment taxes and remitted cash totaling of $2.86 billion to the appropriate tax authorities.

RSU obligation ..... $1,130M
RSU payment ...... $2,163M (modified simply to show the $1.033B overpayment)
Business taxes ....... $559M

Net total ............... $474M

In essence, the total liabilities FaceBook had for 2012 to the IRS was $1.689B.

Now, look at the subject line again. How is it accurate to say they aren't taxed at all by the IRS when they had to pay in $1.689B?

_____________________________

What I support:



• A Conservative interpretation of the US Constitution
  
• Personal Responsibility
  
• Help for the truly needy
  
• Limited Government
  
• Consumption Tax (non-profit charities and food exempt)
  

(in reply to DomYngBlk)

quote:

ORIGINAL: DomYngBlk
Ok great, I looked at the line and what was written. Again, you are missing the point. If it is within the tax code that they should get their millions, so be it. The problem is there shouldn't be a tax benefit such as this when we are "alledgedly" broke. Should there? Or are you going to start talking about of both sides of your mouth once again

• A Conservative interpretation of the US Constitution
  
• Personal Responsibility
  
• Help for the truly needy
  
• Limited Government
  
• Consumption Tax (non-profit charities and food exempt)
  

quote:

ORIGINAL: DomYngBlk
You are still missing the point. It isn't about a dime of what FB paid or didn't pay. It is about the fact that the code allows it in the first place when we are supposedly bankrupt and need to cut spending.
I don't have a clue about your beliefs on the tax code. what you believe seems to change from thread to thread...

• A Conservative interpretation of the US Constitution
  
• Personal Responsibility
  
• Help for the truly needy
  
• Limited Government
  
• Consumption Tax (non-profit charities and food exempt)
  

quote:

ORIGINAL: OrionTheWolf
it does raise a legitimate question on why this is allowed by corporations at all.

quote:

ORIGINAL: DesideriScuri

quote:

ORIGINAL: DomYngBlk
Missing the point again. It is stipulated that it is in the tax code therefore owed back to FB. What is at issue is the hypocrisy of having it there in the first place as corporate welfare.

I'm not missing the point at all. I think you are (and I also think you conveniently continue to forget what I think regarding taxation). Look at the subject line: "Tax Increases? Why Facebook's Billion Dollar Income Isn't Taxed (At All) By IRS"

*If they paid taxes in, they were taxed.

quote:


*If they had a $559M liability, they were taxed.

quote:


*If they paid in more than they had to, netting a refund, they were still taxed.

quote:


All 3 happened. All 3 are valid. They are taxed. They paid in over $1B more than they were supposed to. How much did they pay in? I'm not sure, but, here's what they paid in for those stock options:

quote:

Facebook's annual 10-K report doesn't break out the exact amount, but said it incurred a $1.13 billion obligation related to stock-based compensation and related payroll taxes.




This is tweaking their pockets on the exec side. Run the bonuses, stock options, etc. at the same amount of profit so that the tax burden is zero. That is something many very large corporations have done to avoid paying taxes at the corporate level. It is using the existing tax code. Some feel that is not right, and want that changed.



quote:


Additionally, Facebook withheld $2.86 billion in stock granted to employees to satisfy those employees' tax obligations. (This wasn't tax owed by or paid by Facebook; instead, Facebook withheld it from employees' compensation and paid it directly to the government, the way taxes are regularly withheld from paychecks.) Here's what Facebook said about that in its annual report:


We settled 279 million of Pre-2011 RSUs in 2012 of which 273 million RSUs were net settled by withholding 123 million shares, which represented the employees' minimum statutory obligation for each such employee's applicable income and other employment taxes and remitted cash totaling of $2.86 billion to the appropriate tax authorities.

They incurred a $1.13B obligation (taxes). They paid $2.86B to the "appropriate tax authorities." Apparently, that comes out to a $1.033B overpay to the IRS (I'm assuming the difference between the obligation and the IRS overpay went to the State Government). That's for the stocks. Business taxes were $559M on $1.1B in pre-tax profits. 559/1100 = 50.8%. That's the taxes owed compared to pre-tax profits.

So, let's add this up (Red is liabilities; Green is for payments):

RSU obligation ..... $1,130M
RSU payment ...... $2,163M (modified simply to show the $1.033B overpayment)
Business taxes ....... $559M

Net total ............... $474M

In essence, the total liabilities FaceBook had for 2012 to the IRS was $1.689B.

Now, look at the subject line again. How is it accurate to say they aren't taxed at all by the IRS when they had to pay in $1.689B?

quote:

ORIGINAL: tj444

quote:

ORIGINAL: OrionTheWolf
it does raise a legitimate question on why this is allowed by corporations at all.

why does the govt allow Americans to deduct their mortgage interest at all? imo its the same thing.. but few Americans sign petitions or squawk about that.. sorta funny how that works..

quote:

ORIGINAL: DomYngBlk
Just trying to correct your misconception of the OP. You want to wallow in ignorance who am I to stop you. I am not bitching about FB getting money back. I am bitching about anyone getting a special favor when were are "broke". Aren't we broke? Don't you think we should balance budget? What the fuck have you been whining about over and over and over again each time you open a page. stop spending.
Well we put something in front of you that will help stanch the spending and what do we get? YOU not wanting to stop spending. Gotta say I am not surprised. Its always the other persons spending you want to stop not your own.......
Anyway, you want to look like a moron day after day, have at it.

• A Conservative interpretation of the US Constitution
  
• Personal Responsibility
  
• Help for the truly needy
  
• Limited Government
  
• Consumption Tax (non-profit charities and food exempt)