The $16 billion tax deduction Facebook will receive when it goes public by using stock options prompted Sen. Carl Levin (D-Mich.) to make another push for a law eliminating such deductions.
Reiterating the need for the Ending Excessive Corporate Deductions for Stock Options Act (S. 1375), Levin said Facebook's pre-public offering filings show that the company will no longer be paying taxes because of the stock options it is providing founders and executives.
Facebook plans to capitalize on its massive deductions to create a "net operating loss" -- a legal corporate bookkeeping maneuver under which companies may use past financial losses to offset future taxable income -- to reduce its taxes for years to come, Levin said in attacking what he described as a gigantic tax loophole.
“Despite trumpeting … revenue increases to investors, Facebook is planning at the same time to tell Uncle Sam it has no taxable income, offsetting its revenues with stock option tax deductions,” Levin said in a statement. “Facebook's $16 billion stock option tax deduction is so huge, it will enable Facebook to claim a $500 million refund of taxes paid over the prior two years and wipe out this year's tax bill.”
Check back for updates regarding Senator Levin's bill.