Feeds

Facebook turns billion-dollar profit into tax refund

Nice work if you can get it

Website security in corporate America

Bloomberg is reporting that Facebook has managed to parlay a billion-dollar profit for 2012 into a tax refund of US$429 million.

According to an analysis by Citizens for Tax Justice, The Social NetworkTM got its tax break through deductions for the cost of executive stock options and share awards. For tax purposes, these are treated the same as cash compensation to the executives.

As Bloomberg notes in Business Week, Facebook’s report to shareholders refers to a US$559m liability for federal taxes. Only in the footnotes do alert readers of financials find out that the liability is offset by a $1.03 billion “excess tax benefit” for the stock options.

Its 2012 tax “liability” turned out to include refunds of US$451m for prior taxes paid. Facebook also plans to carry forward another US$2.17 billion in “net operating losses” that should keep its tax bill humming along nicely at zero in the future.

Indulging in a little own-trumpet-blowing, CTJ notes “in total Facebook’s current and future tax reductions from the stock options exercised in connection with its IPO will total $3.2 billion. That’s almost exactly what CTJ predicted last year, when Facebook first announced its IPO”.

The revelations are likely to fuel the growing international backlash against the tech sector’s skill at tax minimisation. While Google’s Eric Schmidt is proud of his company’s tax record, the UK’s Public Accounts Committee seems unhappy over tax minimisation in that country. ®

Internet Security Threat Report 2014

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Bono: Apple will sort out monetising music where the labels failed
Remastered so hard it would be difficult or impossible to master it again
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
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?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.