REPORT: Mark Zuckerberg Faces $1B-Plus Tax Bill

By David Cohen 

Not too many people can handle a tax bill of more than $1 billion, but Facebook Co-Founder and CEO Mark Zuckerberg is a member of that exclusive club, and CNN Money reported that his total tab will likely end up at around $1.1 billion.

According to CNN Money, Zuckerberg exercised a stock option and purchased 60 million Facebook shares at a “strike price” of $0.06 cents apiece last May 18, the day of the social network’s initial public offering, and the Internal Revenue Service treats those shares as ordinary income at the time they are exercised, regardless of whether or not they are sold.

CNN Money added that Zuckerberg will have to report income of nearly $2.3 billion in 2012 for his stock options alone, pointing out that he will pay the top federal tax rate of 35 percent and the top California rate of 13.3 percent, for a total of 48.3 percent.

However, Zuckerberg planned for this eventuality by selling 30.2 million Facebook shares during the IPO, for a total of $1.135 billion, according to CNN Money, and the company said at the time that he would use the “substantial majority” of that money to cover taxes on his stock-option purchase.

CNN Money also pointed out that Zuckerberg still holds 60 million unexercised options that expire in late 2015, which would generate $1.6 billion in income at the current Facebook share price, resulting in a tax bill of $826 million.

Readers: Wouldn’t you like to have similar problems?

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