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#1 User is offline   Natural Selection 

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  Posted 13 May 2012 - 12:51 PM

Facebook Co-Founder Renounces US Citizenship For Tax Reasons

RedOrbit.com
May 13, 2012

Too short to excerpt:


One of the four co-founders of social networking website Facebook has renounced his US citizenship prior to the company’s initial public offering (IPO) — a move that could save him millions in taxes, according to a Friday report by Bloomberg‘s Danielle Kucera, Sanat Vallikappen and Christine Harper.

As Kucera, Valikappen, and Harper first reported, Brazilian-born billionaire Eduardo Saverin, one of the men who helped Facebook CEO Mark Zuckerberg create the social media juggernaut, has surrendered his citizenship in the United States in favor of Singapore, where he currently resides and where there are no capital gains tax.

“Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” Tom Goodman, a spokesman for Saverin, told Bloomberg via email.

With Facebook’s forthcoming IPO being valued for as much as $96 billion, it could save the 30-year-old entrepreneur as much as $600 million when he opts to sell his shares of the company, Foxnews.com has reported. His name was listed among those on an IRS document revealing individuals who have chosen to expatriate, which was released on April 30, according to news reports.

David Goldman of CNNMoney said that it is not currently known exactly how much of the company Saverin currently owns. The Facebook co-founder, who is no longer actively involved in its day-to-day operations, owned 5% of the website as recently as 2009, Goldman said, citing the David Kirkpatrick book “The Facebook Effect.”

However, he has sold off some of those shares in the past three years, as he was not listed as one of those owning at least 5% of the company in Facebook’s pre-IPO regulatory filings, the CNNMoney reporter added.

“The move, which sees him turn his back on the country in which he made his fortune, will no doubt outrage Americans,” the Daily Mail reported in a May 11 article. “And the 30-year-old is hardly strapped for cash, becoming famous for his playboy lifestyle in Singapore, where he buys bottles of champagne at the most exclusive clubs for supermodels and the super-rich.”

Some view Saverin’s move as a result of flaws in US federal tax regulations.

In an article for Forbes.com, Daniel J. Mitchell of the Cato Institute said, “It is very sad that America’s tax system is so onerous that some rich people feel they have no choice but to give up U.S. citizenship in order to protect their family finances… there’s also lots of evidence of taxpayers escaping countries controlled by politicians who get too greedy. Mr. Saverin is just the latest example.”

“The statists say these people are ‘tax traitors’ and ‘economic Benedict Arnolds,’ but those views are based on a quasi-totalitarian ideology that assumes government has some sort of permanent claim on people’s economic output,” he added. “If people are leaving America because our tax law is onerous, that’s a signal we should reform the tax code. Attacking those who expatriate is the fiscal version of blaming the victim.”

(link to article)

Atlas Shrugged...a real-life example.
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#2 User is offline   rocketraccoon 

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Posted 13 May 2012 - 01:09 PM

Hmmm...I guess he's not one of those 1%ers eager to pay his fair share.
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#3 User is offline   zurg 

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Posted 13 May 2012 - 01:13 PM

View Postrocketraccoon, on 13 May 2012 - 01:09 PM, said:

Hmmm...I guess he's not one of those 1%ers eager to pay his fair share.

The other interesting thing is that like Zuckerberg, I'd bet he's a lefty. I think all the founders are.
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#4 User is offline   Hieronymous 

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Posted 13 May 2012 - 02:01 PM

View Postnatural_selection, on 13 May 2012 - 12:51 PM, said:

Facebook Co-Founder Renounces US Citizenship For Tax Reasons

RedOrbit.com
May 13, 2012

Too short to excerpt:


One of the four co-founders of social networking website Facebook has renounced his US citizenship prior to the company's initial public offering (IPO) — a move that could save him millions in taxes, according to a Friday report by Bloomberg's Danielle Kucera, Sanat Vallikappen and Christine Harper.

As Kucera, Valikappen, and Harper first reported, Brazilian-born billionaire Eduardo Saverin, one of the men who helped Facebook CEO Mark Zuckerberg create the social media juggernaut, has surrendered his citizenship in the United States in favor of Singapore, where he currently resides and where there are no capital gains tax.

"Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time," Tom Goodman, a spokesman for Saverin, told Bloomberg via email.

With Facebook's forthcoming IPO being valued for as much as $96 billion, it could save the 30-year-old entrepreneur as much as $600 million when he opts to sell his shares of the company, Foxnews.com has reported. His name was listed among those on an IRS document revealing individuals who have chosen to expatriate, which was released on April 30, according to news reports.

David Goldman of CNNMoney said that it is not currently known exactly how much of the company Saverin currently owns. The Facebook co-founder, who is no longer actively involved in its day-to-day operations, owned 5% of the website as recently as 2009, Goldman said, citing the David Kirkpatrick book "The Facebook Effect."

However, he has sold off some of those shares in the past three years, as he was not listed as one of those owning at least 5% of the company in Facebook's pre-IPO regulatory filings, the CNNMoney reporter added.

"The move, which sees him turn his back on the country in which he made his fortune, will no doubt outrage Americans," the Daily Mail reported in a May 11 article. "And the 30-year-old is hardly strapped for cash, becoming famous for his playboy lifestyle in Singapore, where he buys bottles of champagne at the most exclusive clubs for supermodels and the super-rich."

Some view Saverin's move as a result of flaws in US federal tax regulations.

In an article for Forbes.com, Daniel J. Mitchell of the Cato Institute said, "It is very sad that America's tax system is so onerous that some rich people feel they have no choice but to give up U.S. citizenship in order to protect their family finances… there's also lots of evidence of taxpayers escaping countries controlled by politicians who get too greedy. Mr. Saverin is just the latest example."

"The statists say these people are 'tax traitors' and 'economic Benedict Arnolds,' but those views are based on a quasi-totalitarian ideology that assumes government has some sort of permanent claim on people's economic output," he added. "If people are leaving America because our tax law is onerous, that's a signal we should reform the tax code. Attacking those who expatriate is the fiscal version of blaming the victim."

(link to article)

Atlas Shrugged...a real-life example.


I'm not outraged. It's a perfectly understandable move.
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#5 User is offline   erp 

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Posted 13 May 2012 - 02:11 PM

View Postrocketraccoon, on 13 May 2012 - 01:09 PM, said:

Hmmm...I guess he's not one of those 1%ers eager to pay his fair share.

Yet, ocutards will still communicate with each other using his services. Morons, the lot of them.
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#6 User is offline   gravelrash 

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Posted 13 May 2012 - 02:37 PM

Really no different than what many British entertainers have done (Queen, David Bowie, Rolling Stones, J.K. Rowlings, etc.). Not singling out Brits, point being... MONEY IS LIQUID! It moves to "warmer climates", "favorable tradewinds", "insert nautical term here".

What perplexes is me is how the frup is Facebook valued at $96 billion?!? Can't eat it. Can't drink it. It doesn't heat your house. Can't even wipe your butt with it.

It's all in what people are willing to pay. If I had that kind of savvy, dang straight that I would invent or invest in the next big thing. As it is, I don't have an FB account nor do I ever directly go to Facebook.
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#7 User is offline   needmoreammo 

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Posted 13 May 2012 - 03:08 PM

I'd do it too if I was facing that big of a payday knowing full well Occumerica was going to take most of it.

Cheers to him and to all rich people who are realizing they can just up and leave.
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#8 User is offline   Howsithangin 

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Posted 13 May 2012 - 03:11 PM

View Postnatural_selection, on 13 May 2012 - 12:51 PM, said:

Atlas Shrugged...a real-life example.

my thoughts exactly

Can't blame him one bit.

View Postneedmoreammo, on 13 May 2012 - 03:08 PM, said:

I'd do it too if I was facing that big of a payday knowing full well Occumerica was going to take most of it.

gotta "spread the wealth" around, according to Bo-Bo
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#9 User is offline   Hieronymous 

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Posted 13 May 2012 - 03:17 PM

View Postgravelrash, on 13 May 2012 - 02:37 PM, said:

Really no different than what many British entertainers have done (Queen, David Bowie, Rolling Stones, J.K. Rowlings, etc.). Not singling out Brits, point being... MONEY IS LIQUID! It moves to "warmer climates", "favorable tradewinds", "insert nautical term here".

What perplexes is me is how the frup is Facebook valued at $96 billion?!? Can't eat it. Can't drink it. It doesn't heat your house. Can't even wipe your butt with it.

It's all in what people are willing to pay. If I had that kind of savvy, dang straight that I would invent or invest in the next big thing. As it is, I don't have an FB account nor do I ever directly go to Facebook.


Facebook is good for when this site goes down. It gives us a place to complain to Lisa.
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#10 User is offline   hakeem 

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Posted 13 May 2012 - 06:38 PM

He will still have to pay tax on the value of his stake in Facebook. The only thing he possibly avoid is future capital gains, if he has any. The US has a lower capital gains tax rate than most of the developed world. Singapore has none, one of the reasons he's going there. A few other tiny countries do this to try to attract rich folks.
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#11 User is offline   Natural Selection 

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Posted 13 May 2012 - 07:06 PM

View Posthakeem, on 13 May 2012 - 06:38 PM, said:

He will still have to pay tax on the value of his stake in Facebook. The only thing he possibly avoid is future capital gains, if he has any. The US has a lower capital gains tax rate than most of the developed world. Singapore has none, one of the reasons he's going there. A few other tiny countries do this to try to attract rich folks.


I don't think he has to pay taxes on the value of his Facebook stock until he sells it. Stock sales are considered capital gains when they are worth more than they cost. In this case, they cost him very little and will net him a huge capital gain. If he is no longer a US citizen he will not have to pay capital gains tax to the US government.

It would be great if we could get an accountant to weigh in on this.
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#12 User is offline   Censport 

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Posted 13 May 2012 - 11:49 PM

Leftist: "We should do like the Europeans."

Me: Yeah, the Europeans who moved to Monaco because they don't have an income tax. Or, like most of them, buy a condo there and claim it's their primary residence. American corporations have been doing this for years, so why not citizens? You either do like the Kennedys and keep your wealth in offshore tax shelters or you leave.
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#13 User is offline   hakeem 

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Posted 14 May 2012 - 01:13 AM

View Postnatural_selection, on 13 May 2012 - 07:06 PM, said:

I don't think he has to pay taxes on the value of his Facebook stock until he sells it. Stock sales are considered capital gains when they are worth more than they cost. In this case, they cost him very little and will net him a huge capital gain. If he is no longer a US citizen he will not have to pay capital gains tax to the US government.

It would be great if we could get an accountant to weigh in on this.


Nope, he will have to pay an "exit tax" on all his assets. His Facebook stock will be valued at the IPO price and I'm sure he's expecting it to rise significantly above that. But he will be paying tax on it. Congress passed a bill specifically to discourage this type of thing.
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#14 User is offline   Rock N' Roll Right Winger 

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Posted 14 May 2012 - 01:30 AM

Facebook is owned/funded by CIA and NSA.

What coward deleted my previous post on this? :wtf2:

This post has been edited by Rock N' Roll Right Winger: 14 May 2012 - 01:34 AM

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#15 User is offline   Moderator T 

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Posted 14 May 2012 - 04:46 AM

View PostRock N, on 14 May 2012 - 01:30 AM, said:

Facebook is owned/funded by CIA and NSA.

What coward deleted my previous post on this? :wtf2:


In the other thread that you posted in, or did you bring this up 3 times?
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#16 User is offline   erp 

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Posted 14 May 2012 - 06:09 AM

View PostRock N, on 14 May 2012 - 01:30 AM, said:

Facebook is owned/funded by CIA and NSA.

What coward deleted my previous post on this? :wtf2:

Do you believe everything infowars tells you? Or just this 22 year old indian guy living in the UK?
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#17 User is offline   mjperry51 

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Posted 14 May 2012 - 06:39 AM

Eduardo Saverin was born in Brazil, and became a citizen of the US in 1998. He surrendered his citizenship last year, well before the IPO.

He may pay the exit tax; however he should not be subject to US capital gains taxes.

The fact is money has legs, and will go where it has to in order to survive.
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#18 User is offline   ASE 

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Posted 14 May 2012 - 07:21 AM

I thought that the IRS had you by the 'short-hairs' for 10 years after you denounce your citizenship. :popcorn:

This post has been edited by ASE: 14 May 2012 - 07:22 AM

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#19 User is offline   Jamescush 

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Posted 14 May 2012 - 08:27 AM

Spider-Man No!!!!!!! :insanity:
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#20 User is offline   mjperry51 

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Posted 14 May 2012 - 09:12 AM

View PostASE, on 14 May 2012 - 07:21 AM, said:

I thought that the IRS had you by the 'short-hairs' for 10 years after you denounce your citizenship. :popcorn:

There are qualifiers:

Quote

Expatriation on or after June 16, 2008

If you expatriated after June 16, 2008, the new IRC 877A expatriation rules apply to you if any of the following statements apply.

Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than a specified amount that is adjusted for inflation ($145,000 for 2009 and 2010, $147,000 for 2011, and $151,000 for 2012).
Your net worth is $2 million or more on the date of your expatriation or termination of residency.
You fail to certify on Form 8854 that you have complied with all U.S. federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency.

IRC 877A(g)(4) provides that a citizen will be treated as relinquishing his or her U.S. citizenship on the earliest of four possible dates: (1) the date the individual renounces his or her U.S. nationality before a diplomatic or consular officer of the U.S., provided the renunciation is subsequently approved by the issuance to the individual of a certificate of loss of nationality by the U.S. Department of State; (2) the date the individual furnishes to the U.S. Department of State a signed statement of voluntary relinquishment of U.S. nationality confirming the performance of an act of expatriation specified in paragraph (1), (2), (3), or (4) of section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481(a)(1)-(4)), provided the voluntary relinquishment is subsequently approved by the issuance to the individual of a certificate of loss of nationality by the U.S. Department of State; (3) the date the U.S. Department of State issues to the individual a certificate of loss of nationality; or (4) the date a U.S. court cancels a naturalized citizen's certificate of naturalization.

<snip>

IRC 877A imposes a mark-to-market regime, which generally means that all property of a covered expatriate is deemed sold for its fair market value on the day before the expatriation date. IRC 887A further provides that any gain arising from the deemed sale is taken into account for the taxable year of the deemed sale notwithstanding any other provisions of the Code. Any loss from the deemed sale is taken into account for the taxable year of the deemed sale to the extent otherwise provided in the Code, except that the wash sale rules of IRC 1091 do not apply.


<Bold mine>

Source

If I read this correctly Saveri's Facebook asset would be valued at it's price the day before he renounced his citizenship. He could still benefit from it without selling it for ten years, or place it in a trust that would shelter him from any significant tax liabilities.

Bottom line is he'll find a way. . .
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