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Facebook, Inc. (FB) Message Board

  • ruudkrul Dec 20, 2013 11:50 AM Flag

    Why sold Mark Zuckerberg

    He sold much shares, because he must pay taxes.
    Must he pay so muc and why sold he his investment?
    I think that the investment gives more profit, but i would not have sold.

    Very strange move. Can somebody explain this action.

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    • You guys must understand that stock options granted by a company falls under different tax rules. Once a person exercise the options and take possession of the stock then the person owes the tax on the gain realized on the day he/she took possession. It doesn't matter whether you sell the stock later or hold it.

      A good example is back in the 90s during the tech bubble, a lot of Cisco engineers (non-executive) became millionaires on paper from their stock options. Some of them took possession of the stock when the options had to be exercised. When the tech bubble burst and the stock collapsed, those employees thought they only had to pay taxes on the difference between the option grant price and the "collapsed" price they sold the stock. They were surprised that they owed taxes on the millions of dollars realized the day they took possession of stock. A lot of them went from millionaires to filing bankruptcy.

    • Correct... It's like this: If you inherited $5Mil in land, and can't afford to pay the inheritance tax on it, you have to sell some of it just to pay the tax debt. It doesn't mean you think the property isn't worth much or that you think the value will drop.... you just have to sell a part of what you owe to pay tax on the rest.

    • Yesterday on Bloomberg West, Cory Johnson said that it was possible that he was selling now in anticipation of FB stock going much higher and therefore paying higher taxes. He might want to take the tax hit now. He said that his move was a bullish sign for FB.


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