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Article posted May 11 2012, 3:09 PM Category: Economy Source: Bloomberg Print

Facebook Co-Founder Gives Up U.S. Citizenship Before IPO

By Danielle Kucera, Sanat Vallikappen and Christine Harper

What's amazing about this is he is willing to pay the gigantic "exit tax" to get the f*^k out. Of course, only the freest and most open of countries has a tax on leaving. - ChrisEduardo Saverin, the billionaire co- founder of Facebook Inc. (FB), renounced his U.S. citizenship before an initial public offering that values the social network at as much as $96 billion, a move that may reduce his tax bill.

Facebook plans to raise as much as $11.8 billion through the IPO, the biggest in history for an Internet company. Saverin’s stake is about 4 percent, according to the website Who Owns Facebook. At the high end of the IPO valuation, that would be worth about $3.84 billion. His holdings aren’t listed in Facebook’s regulatory filings.

Saverin, 30, joins a growing number of people giving up U.S. citizenship, a move that can trim their tax liabilities in that country. The Brazilian-born resident of Singapore is one of several people who helped Mark Zuckerberg start Facebook in a Harvard University dorm and stand to reap billions of dollars after the world’s largest social network holds its IPO.

“Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” said Tom Goodman, a spokesman for Saverin, in an e-mailed statement.

Saverin’s name is on a list of people who chose to renounce citizenship as of April 30, published by the Internal Revenue Service. Saverin renounced his U.S. citizenship “around September” of last year, according to his spokesman.

Singapore doesn’t have a capital gains tax. It does tax income earned in that nation, as well as “certain foreign- sourced income,” according to a government website on tax policies there.

Exit Tax

Saverin won’t escape all U.S. taxes. Americans who give up their citizenship owe what is effectively an exit tax on the capital gains from their stock holdings, even if they don’t sell the shares, said Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan’s law school. For tax purposes, the IRS treats the stock as if it has been sold.

Renouncing your citizenship well in advance of an IPO is “a very smart idea,” from a tax standpoint, said Avi-Yonah. “Once it’s public you can’t fool around with the value.”

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Comments 1 - 4 of 4 Add Comment Page 1 of 1

Posted: May 13 2012, 8:06 AM

81161 '..that values the social network at as much as $96 billion..'

Yeah and the Moon is made from Green Cheese ..
Seriously, how stupid are you in believing a 'thing' like Facebubble is actually worth anything but the re-sale value of their physical property ?

Posted: May 15 2012, 3:45 PM

That's the 'beauty' of our stock market though. Something as trivial as a moron being named CEO of a major business will send stocks plummeting - despite the fact that he has to go through the board of directors to do anything major and their profits have yet to be affected by mismanagement. Fakebook's 'stock' value is in the idea that it is an entity who has very powerful social influence and power. If the site suddenly shutdown, how many people do you think would be exceedingly upset about it? From 4 year old girls to 60 year old women and every single person in between, there would be enough rage to make even Bill O'Reilly seem tame.

Posted: May 15 2012, 5:54 PM

FB has huge potential, the possibility of having real money online poker if the legal climate changes is huge, same goes for Zynga. It is a high valuation but it's not necessarily unreasonable, it's pretty much the biggest site on the entire internet, at least in terms of time spent on the site. It's probably worth gambling on the IPO if you've got the money to lose, I wouldn't do it myself but I wouldn't fault those who would.

Posted: May 17 2012, 5:54 PM

If I could afford it, I'd pay that exit tax, Chris. Maybe I should gamble on the IPO for a chance at this chump change?

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