Techdirt. Stories filed under "stock"

Facebook's Lower Stock Price Means Saverin Doubled Tax Bill By Leaving The Country

Timothy Geigner — Fri, 24 Aug 2012 18:36:00 PDT

Back when Facebook first rolled out its IPO in the same smooth and easy fashion as an Olympic hurdler racing with his testicles twisted like a Navy Pier pretzel, Eduardo Saverin, Facebook co-founder, entered the crosshairs of some United States congressmen looking to make some noise. See, Eduardo decided that taxes suck and he wanted to incur as little of said suckiness as possible, so he renounced his American citizenship and declared his love for Singapore. This, according to Chuck Schumer and Bob Casey, made him evil personified.

Exhibit 1: Artist's rendering based upon Chuck Schumer's description

The argument was that Saverin had allowed this country to help make him rich and now, in an evil move that was completely legal, he was going to evade paying the full taxes of an American citizen by no longer being one. To combat this unholy act, Schumer and Casey unveiled the oh-so-cleverly named EX-PATRIOT Act, which would levy heavy taxes on Saverin and anyone else who thought they could escape the virtous clutches of the American tax system.

"This is a great American success story gone horribly wrong," Schumer told reporters Thursday. "Eduardo Saverin wants to defriend the United States of America just to avoid paying taxes. We aren't going to let him get away with it."

But, as fate would have it, Facebook's stock price dropped faster than a Righthaven lawsuit. And the result, according to Forbes, may be that Saverin paid more in taxation than he would have had he stayed in The States.

A couple of things got missed in the furore. The first was that he had to pay tax on his Facebook stock as if he sold it on the day of his citizenship renunciation. The value then was some $2.4 billion, leading to a $365 million tax bill. That tax bill is fixed of course: now that he’s no longer a citizen he doesn’t get any tax breaks or credits on losses he might make. Which of course he has done. Since he crystallised that tax bill his stock (assuming he’s still holding it and he would have been until just now because of the lock in around the IPO) has halved in value to about $1.2 billion. But he still owes that $365 million.

So, at least so far, the net effect of his renunciation has been to double his tax bill, not reduce it. Oh, and if he hasn’t paid the tax as yet then he has to pay interest to the IRS on it.

And there we have it. Schumer and Casey drafted legislation, which didn't pass, to combat a guy who did something legal because they insisted it was unfair that he escape full taxation by renouncing his citizenship. It turns out that Saverin's renunciation caused him to be overtaxed by a rather substantial rate. Any takers on whether Schumer and Casey would be open to Saverin claiming relief from this overtaxation?

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California Bet 2% Of Its Budget On Facebook's Stock Price Remaining High

Mike Masnick — Fri, 3 Aug 2012 11:22:45 PDT

California, a state that has had budget problems for years, apparently bet approximately 2% of its budget on the idea that Facebook's stock would remain at or above $35 and that a bunch of insiders would sell, racking up tax revenue for the state. However, with the stock continuing to drop, the state's fiscal analyst is now warning that perhaps over a billion dollars in expected tax revenue may be at risk. The state's budget is $91.3 billion, and that was built on the assumption that a successful Facebook IPO and insider sales (at an average price of $35) would bring in $1.9 billion. Of course, the stock has been in decline since its IPO, dropping below $20, hence the concern.

What I love about the linked article, however, is that the Bloomberg reporter sought to get a comment from Facebook over this (the company declined). What did he think Facebook would have to say? That it would try harder? That it felt bad that the state overestimated its stock price just about as much as the company itself did? I would imagine that budget overruns by the state due to Facebook's falling stock are pretty far down the list of priorities for Mark Zuckerberg these days...

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Not Recommended: Trying To Boost A Company's Stock By Bombing Investment Banks

Mike Masnick — Thu, 20 Sep 2007 09:47:00 PDT

Investors do all sorts of odd things in trying to get the stocks they like to go up, rather than down. However, there's a limit -- and apparently one guy went way past that limit in trying to boost the stock of networking firm 3com. He sent bomb threats to 17 different investment firms, demanding that they boost the stock. Apparently, he actually did send two bombs, though it doesn't sound like they exploded. Either way, if you suddenly feel that you need to send bombs (or even just threats) to investment banks to make your investments rise, perhaps you should consider different investment opportunities.

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