Facebook receives a tax refund of $429 million on a $1.1 billion profit, how is your 1040 coming?

Well, maybe we were wrong. In an earlier analysis of Facebook’s value before the IPO, we suggested that Facebook was a piece of shit company and a terrible investment. Well, it is, but it’s a great vehicle for moving enormous amounts of money into the pockets of a select few. Check out this article from Wolf Richter on Testosterone Pit for the full story of how Facebook is just another corporate welfare recipient of this facist government.

Facebook filed its first 10-K annual report with the SEC, containing its financial statements for 2012 along with a host of small-print footnotes which presumably no one would ever look at. But the recalcitrant nonpartisan research and advocacy group, Citizens for Tax Justice, combed through it anyway.

And it found “an amazing admission”: despite $1.1 billion in pre-tax profits from its US operations in 2012, Facebook didn’t pay any federal or state income taxes in the US—in fact it will collect net tax refunds totaling $429 million.

Facebook is relying on a single tax break in our glorious corporate tax-dodge code to obtain its negative tax rate: the deductibility of executive and employee stock options. It cut Facebook’s federal and state income taxes by $1.03 billion last year—but that was just part of it. As Facebook said in its footnote under “Share-based Compensation,” on page 68 of the 10-K: “during the years ended December 31, 2012, 2011, and 2010, we realized tax benefits from share-based award activity of $1.03 billion, $433 million, and $115 million respectively.”

Another $2.17 billion of this US tax break is carried forward. To rub it in, COO Sheryl Sandberg giddily pointed out during the earnings call that the company “ended the year with a total of $5.8 billion in NOL tax loss carry forwards created by stock compensation”—to be used in future years.

So in short, Facebook is funneling huge amounts of money, stolen through their fraudulent IPO, to their top executives to go buy coke and hookers or go to Davos and chair the World Bad Guy Convention and then they get a tax refund? Fuck!

So it’s February, and I need to start working on my taxes. It takes hours and hours, as my tax situation appears to be quite complicated now that the US tax code is 73,608 pages. I always end up paying 40%ish of my income in taxes, with which the government wages war and gives to these Facebook motherfuckers.

Is anyone else paying attention?

Charlie Bushmeister

Call me Charlie.

I decided to join with others to write this blog because I feel that I have learned a lot about how to succeed in life in general. It took a lot of trial and error and I’ve developed a wealth of philosophies, skills, and tricks of the trade that would be very useful to like minded guys out there. There’s no need to repeat my mistakes, of which I have made many, instead I urge you to read this blog, absorb and practice its lessons, and then go out and have the most awesome life, on your own terms. To me that means good health, success in your career, the number and type of relationships you want, and general satisfaction that you’re not wasting your life spinning your wheels, but going forward always towards your goals.

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  • krautz

    Dude, the people who receive those stock options have to pay tax on them if they ever exercise them. If they let the options expire and don’t exercise them, then the options are literally worth nothing. And if the company is not public and you can’t sell your stock, you can end up with a situation where you have to pay taxes on asset gains with money you don’t have. It’s like a corporation getting a tax deduction on dividends, the people receiving the dividends have to pay the tax on the dividends they receive, sometimes at a higher rate than the corporation itself.

    That $429 million is money they already paid to the state being returned to them, it’s not ‘free money’. If they were based in the UAE and had no corporate or income tax period, would you be so angry?

    • Well for starters, options are not taxed like regular income after 1 year, they’re taxed as capital gains at a much lower rate. Furthermore, it’s not like they had that 429 mil withheld from their W-2, they just wrote a bunch of shit off and got a check from the IRS similar to regular welfare queens.

  • Rud

    Charlie, I was under the impression you work internationally. I don’t mean to insult your intelligence, but you are aware you are eligible for a substantial tax exemption so long as you stay out of the US for 330 days out of a year? I think it is $96k this year.

    • We are perfectly aware of this. However, let me get this straight: You think that even those who live outside of the US, have no assets there, no income and never visit should pay taxes on any amount of money while Facebook gets $429,000,000 for free? I mean we’re not talking about just avoiding paying taxes, we’re talking about a scam where they are actually getting free money from the bankrupt government.

      • I think he was just trying to make sure I wasn’t getting screwed more than absolutely necessary by the IRS, Manuel. It’s hard to avoid, however.

    • Yes I know that but I still have US based income that I have to pay taxes on despite getting jack shit in return.

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