Meta defends a $355M tax credit tied to Zuckerberg options

Meta is locked in an ongoing dispute before the U.S. Tax Court over roughly $355 million in federal research tax credits. The company claimed the deduction after counting roughly $4.1 billion of CEO Mark Zuckerberg's stock option payout from 2012 and 2013 as qualifying research wages. Facebook originally claimed more than $618 million in total research credits across those two tax years.

The disagreement turns on timing. The options were granted in November 2005 and reached 120 million shares after stock splits. Meta argued that 2005 is the relevant year, stating Zuckerberg personally wrote software code and supervised technology at that time. The IRS rejected that claim, arguing the relevant vesting period ran from Jan. 1, 2008, through Nov. 1, 2010, which limits eligible research pay to work conducted during those dates. Both parties asked the court to resolve the timing issue in May 2025, and the court has not yet issued a decision.

To cover taxes on the exercises, Zuckerberg sold 30.2 million shares at the $38 initial public offering price for about $1.15 billion. In December 2013, he sold an additional 41.35 million shares at $55.05 each, generating roughly $2.3 billion.

According to a New York Times report published on Sept. 30, Meta has expanded its use of the research credit to artificial intelligence data centers, classifying them as experimental pilot models. Company regulatory filings indicate the research credit reduced Meta's tax liabilities by $700 million in 2023, $2 billion in 2024, and $3.9 billion in 2025.