Facebook's Zuckerberg faces $1 billion tax bill

Facebook's stock market debut left founder and CEO Mark Zuckerberg with a paper fortune currently valued at $13 billion -- and a 2012 tax bill of around $1.1 billion, CNN Money reported.

Zuckerberg's whopping tax hit stems from his move last May to increase his stake in Facebook. On the day of Facebook's initial public offering, Zuckerberg exercised a stock option and purchased 60 million Facebook shares at a "strike price" of 6 cents each.

Even if those shares are never sold, the IRS treats them as ordinary income at the time the options are exercised. The rationale is that such options are a form of compensation, just like regular wages.

For Zuckerberg, that means reporting income last year of nearly $2.3 billion from his stock options alone. Adding together the top 2012 federal tax rate of 35% and the top California rate of 13.3% -- the highest in the nation – will make up a total tax rate of 48.3%

"With numbers that large, it's usually capital gains, not ordinary income," said Toby Johnston, a partner at tax firm Moss Adams LLP's Silicon Valley office who works with wealthy clients. Investors profiting off their gains paid a significantly lower tax rate last year than Facebook's founder will. The highest federal capital gains rate in 2012 was 15%. It goes up to 23.8% this year.

The Internal Revenue Service does not reportedly comment on the returns of individual taxpayers, but each year it releases aggregate data on the 400 U.S. tax filers with the largest reported incomes. The average top earner had income of $202 million and a federal income tax bill of $41 million for 2009, the most recent data available.

A Facebook spokeswoman declined to comment on Zuckerberg's taxes.