Facebook's Zuckerberg Could Owe $2B in Taxes After IPO

Facebook founder Mark Zuckerberg may have set the record for being the youngest billionaire, but the company's IPO might also put him in the books for paying the highest taxes. Since the 27-year-old entrepreneur plans to exercise stock options worth billions, his tax bill could reach as high as $2 billion.

CNNMoney reported that industry experts say this could set a new record.

I personally have never seen a bill into the billions--close, but not quite, Anthony Nitti, a Colorado-based CPA and partner with Withum, Amith and Brown, told CNN. I talked to a few buddies of mine at the Big Four accounting firms, and it's something not many people have seen.

Currently owning more than 400 million shares of the company, Zuckerberg also holds options to buy another 120 million shares at the price of 6 cents each. He plans to exercise those options and sell shares during the company's initial offering to cover the tax bill, according to CNN.

Since Zuckerberg's options will be taxed as ordinary income, he will owe taxes based on the differences between what he pays (6 cents) and the market value.

When Facebook shares are sold to the public, analysts expect that they could be sold at $40 each, valuing the company at $100 billion. This would make Zuckerberg's options worth almost $5 billion.

According to Forbes, the richest Americans pay 18 percent of their income to taxes. This is a drop from the 30-percent tax rate paid by wealthy citizens before 2003.

Zuckerberg plans to keep ownership control over his company, keeping his financial fortunes closely tied to Facebook.

He's doing it the smart way, San Francisco CPA Stan Pollock told CNNMoney. We learned from the dot-com bust that people should do it that way-sell shares to cover the tax bill.

In September, Forbes ranked Zuckerberg as 14th out of the 400 richest people in America, with Bill Gates coming first on the list.