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Facebook will pay no U.S. income tax for 2012 according to Citizens for Tax Justice, a tax advocacy group. Facebook made $1 billion in U.S. profit before taxes last year. Citizens for Tax Justice (CTJ) say that Facebook will receive a tax refund of nearly $430 million because of tax deductions from stock options that Facebook gave to its employees. Companies can use tax deductions from stock options to offset their profits and also apply those losses to previous years. According to independent tax experts CTJ hasn’t told the whole facts and they are mixing tax law and corporate accounting policies together. Stan Pollock, a San Francisco CPA, said “[CTJ] is talking about apples and oranges … by mixing up two sets of rules, it’s easy to give misleading information.” Companies can be unprofitable for tax purposes but profitable on an accounting basis and both are correct under the different rules. Pollock continued, “Tax returns are private,” he said “Companies give numbers in their financial statements that aren’t necessarily the true tax numbers as far as the IRS is concerned.” Dan Morris, a senior partner at San Jose CPA firm Morris and D’Angelo, said, “Some people have a hard time recognizing both sides of it. Where Facebook is taking a deduction, a person is counting that as income. U.S. taxpayers absolutely did not get the shaft here.” When a company issues a stock option, it gives an employee the right to buy shares in the future at today’s “fair value” price. The company accounts for that value on its books at the time the option is issued, but it can’t take the tax deductions until the employee exercises his or her option — sometimes years later. “You might as well have a crystal ball and someone with a shawl over their head taking a guess,” Morris said. CTJ’s report claims that “because companies typically low-ball the estimated values, they usually end up with bigger tax deductions.” Facebook said in an e-mail that the company believes “in paying our fair share, and we do pay our fair share.”

Facebook Earns Billions, but Paid Zero Dollars in Taxes: Is This Fair?

facebook-taxes

Facebook will pay no U.S. income tax for 2012 according to Citizens for Tax Justice, a tax advocacy group. Facebook made $1 billion in U.S. profit before taxes last year.

Citizens for Tax Justice (CTJ) say that Facebook will receive a tax refund of nearly $430 million because of tax deductions from stock options that Facebook gave to its employees.

Companies can use tax deductions from stock options to offset their profits and also apply those losses to previous years.

According to independent tax experts CTJ hasn’t told the whole facts and they are mixing tax law and corporate accounting policies together.

Read Original Article At Techyville

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