Skip to comments.California's risky bet on Facebook
Posted on 05/28/2012 8:24:39 AM PDT by Mark Landsbaum
California government may receive a windfall from huge capital-gains taxes on the sale of Facebook stock following the Palo Alto social-networking behemoth's recent initial public offering. Or not.
Some were disappointed that the stock opened at $38 only to drop within a few days to $31.
A worst-case scenario for Gov. Jerry Brown and his Democratic Party colleagues desperate to shore up the state budget would be if resales of Facebook stock kept declining in value, not only eliminating capital gains, but providing tax deductions for selling shares at less than their purchase price...
(Excerpt) Read more at ocregister.com ...
This doesn’t make sense. They’ll reap the capital gain on the issuance, and capital loses are limited.
Where am I wrong?
I think Californika is hoping for the capital gains on the insiders who live and work in the state. They most likely received the stock for near zero. So the state will have gains to tax no matter if the stock falls below the issuance price. However, insiders have to hold the stock 800 - 880 days and who knows where “fakebook” will be by then. Also, one could quit the company, take up residence in another state and sell later.
They’re scared because they’ve already spent that money.
Anything the state gets from FB it would not have earned a penny of it. Did they think FadeBook was their new golden goose, ahahahahahahahahahah. They will never learn it seems until a total collapse hits them like a rock.
What an excellent, descriptive and well written article from the OC. That was beautiful man! Send it to Drudge-—its a winner.