Feeds

Facebook stock plunge leaves tax-dodge Saverin WORSE off. Haa ha

Imagine one's concern

Build a business case: developing custom apps

While taking a break from sipping Cristal Champagne at his home in tax-haven Singapore, Eduardo Saverin - who stumped up $30,000 to get Facebook going when he was Mark Zuckerberg's roommate at Harvard - sparked a political firestorm last month when he renounced his American citizenship ahead of the social network's stock market debut.

The move provoked much vituperation to the point where a senator or two called for him to be banned from the States: it was assumed the change in citizenship was a manoeuvre to avoid paying tax on any gains from his share of the social networking website, a claim Saverin strongly refuted.

However, given the plummeting Facebook share price, Saverin's renunciation pre-IPO will leave him more out of pocket than if he had waited until after Zuck tumbled down the Nasdaq. For on the day Saverin ditched his citizenship he had to calculate a tax bill for the US government based on everything he owned, and that was higher back then than it would be now.

Felix Salmon has the chart here. It shows what Facebook was worth on online marketplace SecondMarket last autumn. And the bit that you need to know is that upon the day Saverin gave up his passport, he was taxed as if he had sold all of his belongings.

Yes, everything: all capital gains became taxable at that point. And as you can see, the IRS has a pretty good idea of what those Facebook shares were worth then, and that's the number that will be on Saverin's bill. It doesn't matter what happens to the share price in the future, that's the bill he's stuck with.

Which of course means that if Facebook soars to the stars then his bill has been reduced. However, as us curmudgeons on the El Reg financial desk mutter, if we don't even see that opening price again, then he's stuck with that tax bill.

Certainly, as matters stand, given that his tax bill will have been calculated at that higher price, his renunciation of his citizenship has increased, not reduced, the levy on his Facebook stock.

Which you can take any way you like really, but it's hardly the sort of favour we should be encouraging politicians to do something about, is it? ®

The essential guide to IT transformation

More from The Register

next story
Microsoft exits climate denier lobby group
ALEC will have to do without Redmond, it seems
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
BYOD's dark side: Data protection
An endpoint data protection solution that adds value to the user and the organization so it can protect itself from data loss as well as leverage corporate data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?