If you’re dreading April 15 due to a big tax bill- it could be worse. Facebook’s IPO made founder Mark Zuckerberg a billionaire — but left him with a tax bill likely to top $1 billion. Here’s the story from the CNN news feed.
Facebook’s stock market debut left founder and CEO Mark Zuckerberg with a paper fortune currently valued at $13 billion — and a 2012 tax bill of around $1.1 billion.
Zuckerberg’s whopping tax hit stems from his move last May to increase his stake in Facebook. On the day of Facebook’s initial public offering, Zuckerberg exercised a stock option and purchased 60 million Facebook shares at a “strike price” of 6 cents each.
Even if those shares are never sold, the IRS treats them as ordinary income at the time the options are exercised. The rationale is that such options are a form of compensation, just like regular wages.