BS: Facebook founder renounces citizenship

Subject: BS: Facebook founder renounces citizenship
From: Wesley S
Date: 18 May 12 - 05:12 PM

I think this pretty much sucks. Your thoughts?



Facebook co-founder Saverin renounces U.S. citizenship
3:10 pm May 11, 2012, by Christopher Seward

(Associated Press)

A Facebook co-founder has renounced his U.S. citizenship, and some observers say the reason may have to do with the tax bite he'll face after the social networking site goes public next week.

Eduardo Saverin, 30, stands to reap billions from Facebook's May 18 stock offering, according to Bloomberg News. Although his original 34 percent stake in the company is now estimated at below 10 percent after a falling out with Facebook, he still owns a sizable chunk of the company.

Saverin, credited with helping Mark Zuckerberg start Facebook while the two were at Harvard University, ranks at No. 634 on Forbes' list of billionaires, with an estimated net worth of $2 billion. Those billions will multiply after the company's initial public offering, which prices Facebook's new stock at between $28 and $35 each.

The IPO, however, will also leave Saverin and many instant millionaires among Facebook staffers owing millions to Uncle Sam and state governments.

Facebook is already estimating that its employees will owe the IRS at least $4 billion. The tax bite for Saverin, however, will be greatly eased now that he's a citizen of Singapore.

Saverin became a U.S. citizen in 1998 after moving to the country six years earlier, but he renounced his citizenship last September. His name appears on a quarterly federal list of Americans who have renounced their citizenship, the latest group as of April 30. Bloomberg reported a record 1,780 Americans gave up their U.S. passports last year.

Saverin won't entirely escape Uncle Sam's reach, however. An international tax expert told Bloomberg that Americans who give up their citizenship still face what amounts to an exit tax on capital gains from their stock holdings. The IRS treats the stock as if it has been sold, even if the investor hasn't unloaded it.

Subject: RE: BS: Facebook founder renounces citizenship
From: Bonzo3legs
Date: 18 May 12 - 06:29 PM

Good for him.

Subject: RE: BS: Facebook founder renounces citizenship
From: McGrath of Harlow
Date: 18 May 12 - 06:30 PM

While the place you live might be relevant for tax purposes, along with where the moneymaking operation is sited, I can't see why someone's nationality should make any difference.

Governments in all countries who fail to devise tax regulations that prevent tax fiddles are as guilty in this kind of thing as the people who fiddle their taxes. I get very suspicious when they throw their hands upin horror but fail to act effectively to make the rich pay up.

Subject: RE: BS: Facebook founder renounces citizenship
From: Q (Frank Staplin)
Date: 18 May 12 - 08:44 PM

I heard the story on the news, but I have not looked into the details, but if he did it to avoid U. S. taxation on money made in the U. S., while a citizen of the U. S., his extradition should be sought to return him to face prosecution.

Subject: RE: BS: Facebook founder renounces citizenship
From: Bobert
Date: 18 May 12 - 08:46 PM

Greed is a bad thing... This guy is rich beyond anyone's wishes... Sorry, pal, but you can't come home again... Yer mom gets sick??? Tough... Yer kind ain't allowed here any more...

B~

Subject: RE: BS: Facebook founder renounces citizenship
From: Rapparee
Date: 18 May 12 - 09:46 PM

SINGAPORE (AP) -- Facebook co-founder Eduardo Saverin has renounced his U.S. citizenship, a move expected to save him hundreds of millions of dollars in taxes stemming from the company's impending initial public offering.

The Brazil-born 30-year-old became a U.S. citizen in 1998 but has lived in Singapore since 2009. Giving up his citizenship will allow him to avoid paying taxes on billions of dollars of capital gains when Facebook launches its IPO Friday. Singapore does not have a capital gains tax.

Saverin gave up his citizenship in the first quarter of this year, the U.S. Internal Revenue Service said.

"Eduardo recently found it to be more practical to become a resident of Singapore since he plans to live there for an indefinite period of time," Saverin's New York-based spokesman Tom Goodman said Tuesday in a statement.

Goodman said that because Saverin plans to invest in Brazilian and global companies that have strong interests in entering Asian markets, "it made the most sense for him to use Singapore as a home base."

Saverin has a 4 percent stake in Facebook, which has headquarters in Menlo Park, California. Analysts say the company could be worth $100 billion.

Saverin, who moved to the U.S. from Brazil in 1992, founded Facebook with Mark Zuckerberg in 2004 while the two were students at Harvard University. Saverin gained additional fame when his conflict with Zuckerberg and departure from the company was depicted in the 2010 movie "The Social Network."

Then there's this:

NEW YORK (AP) -- It was barely a "like" and definitely not a "love" from Facebook investors as the online social network's stock failed to live up to the hype in its trading debut Friday.

One of the most anticipated IPOs in Wall Street history ended on a flat note, with Facebook's stock closing at $38.23, up 23 cents from Thursday night's pricing.

That meant the company founded in 2004 in a Harvard dorm room has a market value of about $105 billion, more than Amazon.com, McDonald's and Silicon Valley icons Hewlett-Packard and Cisco.

It also gave 28-year-old CEO Mark Zuckerberg a stake worth $19,252,698,725.50.

"Going public is an important milestone in our history," Zuckerberg said before he pushed a button that rang Nasdaq's opening bell from company headquarters at 1 Hacker Way in Menlo Park, Calif. "But here's the thing: Our mission isn't to be a public company. Our mission is to make the world more open and connected."

But for many seeking a big first-day pop in Facebook's share price, the increase of six-tenths of one percent was a letdown.

Doesn't matter -- he earned it as a US citizen. You pay to play.

Subject: RE: BS: Facebook founder renounces citizenship
From: McGrath of Harlow
Date: 19 May 12 - 08:43 AM

I can't see why citizenship as such should make any difference to tax. Presumably if this bloke was living in the United States he'd be liable for the same tax whether he's a citizen or not.

Subject: RE: BS: Facebook founder renounces citizenship
From: JohnInKansas
Date: 19 May 12 - 09:02 AM

The US, like most nations, does have an "exit tax" that applies to all assets owned by a person as of the date of filing a renunciation. Although the rate is about the same as the "capital gains" tax (half what wage earners pay, or less) the valuation on stocks and other property is "as if sold on the date of filing."

The tax saving he will see, after paying the exit tax, will thus be only the tax on the increase in market price of his stock, between the date of the renunciation and the date of conversion in the IPO.

I haven't checked the "estimated value" when he made the move against the rather disappointing (to some) price established by the IPO, but if significant it could trigger a charge of "insider trading" (i.e. he had private knowledge of the pending IPO that was expected to make the value go up significantly) which could conceivable make him subject to criminal charges and substantial fines (or to civil suits which would make the fines "penalties").

With the company "untraded" at the time, the US Treasury can make up about any "asset value" they care to use. Or since the "estimated stock values" increased with the announcement that there would be an IPO, it could be argued that the "asset value" had the peak that would reasonably be estimated at the time he applied his "insider knowledge."

If he was/is at all aware, he should hope that his "new country" has no, or very weak, extradition treaties; but one of the reasons he had "only a 10% share" is because other Facebook managers decided "he wasn't much of a manager," according to at least one of the others.

John

Subject: RE: BS: Facebook founder renounces citizenship
From: Q (Frank Staplin)
Date: 19 May 12 - 03:06 PM

Singapore signed extradition treaties with the U. S., December 22, 1931; entered into force June 24, 1935, June 10, 1969. See 47 Stat. 2122 and 20 UST 2764.

In a current case, Singapore court says four suspects can be extradited to U. S. to face conspiracy charges after electronic components (radio frequency modules) from a U.S. company were smuggled to Iran and ended up in explosives in Iraq.

CNN News, Elizabeth Neisloss, February 10m 2012.

Subject: RE: BS: Facebook founder renounces citizenship
From: JohnInKansas
Date: 19 May 12 - 04:10 PM

Q - so it looks like he's upholding his reputation as "not much of a manager?"

(At least it seems he may have omitted the "6P" principle.)

John

Subject: RE: BS: Facebook founder renounces citizenship
From: Q (Frank Staplin)
Date: 19 May 12 - 04:17 PM

Seems like. Ten percent = about $10 billion?

But does he hold the shares personaly, or are they in holding by Facebook?
Somehow, I don't think he is home free, but we will hear as the story is followed up. Wait and see.

Subject: RE: BS: Facebook founder renounces citizenship
From: gnu
Date: 19 May 12 - 05:47 PM

Is it a gamble? If so, it seems very foolish to gamble for more money when you already have more than you can spend.

Subject: RE: BS: Facebook founder renounces citizenship
From: SINSULL
Date: 19 May 12 - 06:17 PM

"more than you can spend"
That's why I love you, gnu. His relationship with money has nothing to do with what it can buy. You don't get that.
How's MOM?
SINS

Subject: RE: BS: Facebook founder renounces citizenship
From: JohnInKansas
Date: 19 May 12 - 07:06 PM

For the sake of giving him as much allowance as possible, it would seem that he may just have wanted to live somewhere else.

Some of the reports, perhaps from those few sources who don't need to "stir things" to get readers, have implied that while he played some part in getting the business started he has recently been pretty much "marginalized" within the company (if that's the current management-speak from the mouth on the face I'm nearest to) and he wasn't playing a very significant role in the company. Maybe he just felt he wasn't contributing wanted to retire(?).

There is also that he apparently was not a native-born USian, and came to the US and became a citizen as a sort-of-adult. That he came in and became a citizen of his own choice might suggest a less harsh judgement of his more recent choice to leave and become a citizen elsewhere. Maybe he just can't make up his mind(?)¹.

¹ although that trait seems to be a required qualification for many managers I've known ... maybe it was something else he was lacking.

John

Subject: RE: BS: Facebook founder renounces citizenship
From: Sandy Mc Lean
Date: 21 May 12 - 02:16 AM

The USA requires citizens to file a tax return every year even if they do not live in the country. He is a native of Brazil living in Singapore. The internet is global so exclusive claims by Uncle Sam to revenue that he earned from Facebook may not fall totally within the jurisdiction of the IRS. While the USA may not recognize his dual citizenship international law does. By renouncing his US entitlements he changes his international tax status. Is that fair and I would say not, but neither is it fair for the IRS to bully much poorer citizens of Canada who were born in the USA, because they file no IRS returns. What comes around goes around!

Subject: RE: BS: Facebook founder renounces citizenship
From: Charley Noble
Date: 21 May 12 - 07:48 AM

I wonder how many "Facebook Friends" he has lost or gained by this decision?

Cheerily,
Charley Noble

Subject: RE: BS: Facebook founder renounces citizenship
From: McGrath of Harlow
Date: 21 May 12 - 06:25 PM

So if he was living in Singapore as a US citizen he'd be more liable to pay tax than if he was living inn Singapore and not being a US citizen?

And if he was living in the US would he have to pay less or more tax if he was a US citizen than if he wasn't?

It all seems very peculiar. What has citizenship got to do with tax liability anyway?

Subject: RE: BS: Facebook founder renounces citizenship
From: GUEST,Stim
Date: 22 May 12 - 03:25 PM

Taxes are very peculiar, though, aren't they McGrath? US citizens are obliged, to file returns and pay taxes to the US, no matter where they live, or earn their money.

I'm not one to shed a tear for the wealthy, but if I was a Brazilian investor who lived and invested in Singapore, I'd be slightly put out at having to send 15% of my capital gains to the United States government.

Subject: RE: BS: Facebook founder renounces citizenship
From: GUEST,999
Date: 23 May 12 - 12:35 AM

"US citizens are obliged, to file returns"

That comma is just plain wrong.

Americans have no class.

Subject: RE: BS: Facebook founder renounces citizenship
From: Q (Frank Staplin)
Date: 23 May 12 - 02:35 PM

Americans are obliged, but the Chinese have caught up; the British 'lost it' years ago.

Subject: RE: BS: Facebook founder renounces citizenship
From: GUEST,leeneia
Date: 23 May 12 - 11:02 PM

"Americans have no class."

Ha! Just an hour ago I saw a picture of a train on a siding at Oblivion, South Dakota. I bet your country doesn't have a town with a name as nifty as "Oblivion, South Dakota".

Subject: RE: BS: Facebook founder renounces citizenship
From: Sandy Mc Lean
Date: 23 May 12 - 11:43 PM

Oblivion, South Dakota is trumped by Intercourse, Pensylvania but Canada still wins with Dildo, Newfoundland!

Subject: RE: BS: Facebook founder renounces citizenship
From: GUEST,leeneia
Date: 24 May 12 - 11:33 AM

YOu make valid points, Sandy, but only if Dildo means what we think it means. What if it's an Algonquin word that means 'beautiful valley'? Then what?
==========
Now back to the Facebook IPO. Can anybody tell me in a few sentences what Facebook's business plan is? How does it plan to make money?

I lost interest in IPO's long ago, so I haven't paid much attention to the Facebook IPO. I do note that the stock came out at $38, and the last I heard, IPO's traditionally come out at about $20.

I suppose advertising revenue is part of the plan, but when I think about businesses which rely on ad revenue (newspapers, magazines, TV networks), they are not flourishing. Why did they think the world would race to pay almost double (38 versus 20) for stock relying on ad revenue?

I should mention that I don't know what Facebook is like. I signed up once, was dismayed at the threat to my privacy, and cancelled my account after 15 minutes.

Subject: RE: BS: Facebook founder renounces citizenship
From: The Sandman
Date: 24 May 12 - 01:01 PM

but yOu dont have cold christmas or billy antHony's bottom, or six mile bottom or trotters bottom.
here in Ireland we have MURDERERS GLEN,

Subject: RE: BS: Facebook founder renounces citizenship
From: Q (Frank Staplin)
Date: 24 May 12 - 01:15 PM

Renounce facebook !

Subject: RE: BS: Facebook founder renounces citizenship
From: framus
Date: 24 May 12 - 07:10 PM

Schweik'
Also Bloody Foreland and Hell's Hole.
Regards to Jaroslav Hasek, btw.

Subject: RE: BS: Facebook founder renounces citizenship
From: GUEST,Stim
Date: 25 May 12 - 10:50 AM

Well, Leeneia, you are not the only one with that question. The feeling is growing among advertisers that no one goes to Facebook to buy things, and GM, the world's third largest advertiser has pulled their $10 million Facebook ad budget. Possibly as a result, the Facebook IPO seems to be tumbling.

There is an old saying, "If you don't have a plan for making money, don't plan on making money."

And GUEST 999, America is a classless society. We have lots of commas, though.

Subject: RE: BS: Facebook founder renounces citizenship
From: Q (Frank Staplin)
Date: 25 May 12 - 02:17 PM

The Facebook IPO will fluctuate, but will eventually settle into a groove commensurate with its value to advertizers and subscribers.
It is a new take on communicating accepted by people (some refusniks like leeneia and me).

Its eventual success seems assured. Here are some of the people involved with advising Mark Zuckerberg:

Reed Hastings. CEO of Netflix. A Facebook board member.
Donald E. Graham, CEO of Washington Post. Advises on management.
Sheryl Sandberg. Chief operating officer, specialist in management and communications.
Jim Breyer. Accel Partners, advises on hirings and operations.
Peter Thiel. Co-founder of PayPal, Advises on corporate strategy and economics, deal-making.
Sean Parker. Co-founder of Napster. Determined financial structure.
Reid Hoffman. Graylock Partner and co-founder of LinkedIn. Advises on China operations and scaling businesses.
Marc Andreesen. Co-founder Netscape, Fcebook board member. Concerned with management and product design.
Matt Cohler. Partner, Benchmark Capital. Advises on team-building and company culture.
Bill Gates. Founder of Microsoft. Advises on philanthropy and money management,

From NY Times, Business Section, Sunday, May 13, 2012.

Subject: RE: BS: Facebook founder renounces citizenship
From: GUEST,leeneia
Date: 25 May 12 - 02:30 PM

I suspect that the advertising model for making money has burned itself out. I don't even notice advertising unless it irritates me, and if the ad irritates me, I don't buy the product.


We are exposed to too much of it, so we block it out.

There's one exception: if you put a cute little kid in an ad, I will notice the cute little kid.

There's an early music group in town that uses Facebook, and I will go to their site for info. But I don't have to have a Facebook account for that. Possibly the musicians pay a fee, so that would be revenue.

I'm not about to invest in Facebook stock when the deal seems so tenuous.

Subject: RE: BS: Facebook founder renounces citizenship
From: GUEST
Date: 25 May 12 - 05:11 PM

I do use Facebook a lot for a lot of musical projects. I live the option of posting photos or illustrations as well. I have learned to make use of my privacy options when I post.

I am also a member of several Facebook musical groups, including the Mudcat Cafe group.

However, if you are new to Facebook there's a lot to learn.

Cheerily,
Charley Noble

Subject: RE: BS: Facebook founder renounces citizenship
From: kendall
Date: 26 May 12 - 10:05 AM

I dumped Facebook.

Subject: RE: BS: Facebook founder renounces citizenship
From: GUEST,Stim
Date: 26 May 12 - 12:20 PM

Facebook's eventual success is not assured. It's survival isn't even assured, although it isn't very likely to disappear completely.

Facebook has to generate revenue on a massive scale, but it's a social destination, not a business destination. Simple analogy, this Memorial Day Weekend, a lot of people go shopping at the Mall, and a lot go to the beach. If you want to make money, which is a better investment?

Subject: RE: BS: Facebook founder renounces citizenship
From: GUEST,leeneia
Date: 27 May 12 - 09:21 AM

Makes sense, Stim.

Charley approves of Facebook because it's useful to him, but the question is, How does Facebook make money?

Subject: RE: BS: Facebook founder renounces citizenship
From: Q (Frank Staplin)
Date: 27 May 12 - 03:48 PM

Any enterprise that gathers large segments of populations is an open road for advertisers. Even mudcat has attracted advertisers. Google (traded on Nasdaq) was a pioneer (odd name for something so recent). It has 72 billion in assets and 33,000 employees. It is profitable, and Facebook, with 900,000,000 users, will be too. Mother internet has spawned profitable children.