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Zuckerberg Taxes

February 8, 2012 by staff 

Zuckerberg Taxes, Facebook founder Mark Zuckerberg stands to make billions when the social networking site goes public later this year. But he could also be hit with a record-setting tax bill.

Zuckerberg plans to exercise stock options worth about $5 billion in the company’s upcoming IPO, boosting his stake in the company.

But the 27-year-old’s windfall would likely leave him with a tax bill of more than $2 billion, probably making him the largest taxpayer in history, CNN reports. The type of options Zuckerberg holds are taxable as salary when exercised, even if they aren’t sold.

The tech guru currently owns about 400 million shares of Facebook, but he holds options to snag up another 120 million shares at just 6 cents a piece. This means Zuckerberg will owe taxes on the difference between what he paid for his shares and their market value the day he exercises the options.

Some industry watchers believe Facebook shares will go at a significant premium when they’re sold to the public, with estimates reaching as high as $40 a share. At that price, Zuckerberg’s options would be worth almost $5 billion, leaving him with a hefty tax bill close to $2 billion.

But don’t feel too bad for the guy. Facebook said in its IPO paperwork that Zuckerberg will sell enough shares during Facebook’s initial offering to cover the massive tax.

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