Facebook to pay NO tax for 2012 and will even get tax refund of $429m despite $1BN profits (1 Viewer)

[gwballin]

Yeah. Great analogy.

Facebook restructured its employee contract by converting the base salary into signing bonus. It paid $5 billion in taxes in 2012; against a profit of $1 billion, it saw $4 billion in loss in 2012.

The signing bonus is spread over the life of the contract. In the case of a business losses, it's 3 years I think, maybe 2. So fb spread forward $1.33 billion loss in each of 2013, 2014, & 2015, much like the signing bonus is spread over the life of the contract for salary cap purpose.

If a company elects not to carry back the nol to get a refund of taxes paid in prior years, the nol can be carried forward for 20 years before it expires.

However the entire nol would be used in 1 year provided there was enough taxable income to absorb it.

 

[efil4stnias]

For the football crowd - he's saying one system counts cash laid out, while the other can spread it like a signing bonus. Facebook might have some renegotiated contracts on the books, if you will.

Yeah. Great analogy.

Facebook restructured its employee contract by converting the base salary into signing bonus. It paid $5 billion in taxes in 2012; against a profit of $1 billion, it saw $4 billion in loss in 2012.

The signing bonus is spread over the life of the contract. In the case of a business losses, it's 3 years I think, maybe 2. So fb spread forward $1.33 billion loss in each of 2013, 2014, & 2015, much like the signing bonus is spread over the life of the contract for salary cap purpose.

Fantastic analogy and subsequent explanation guys.

Thank you for those of us that slept thru Acct 101 and 201. ( plus, being a Finance major, i was hated on by my Acct professors. haha )