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You latter point doesn't really make sense to me. Isn't it true that a sale of IP should model the value of the IP over its lifetime in some reasonable way? An

by ska 7y ago

You latter point doesn't really make sense to me. Isn't it true that a sale of IP should model the value of the IP over its lifetime in some reasonable way? And that would include a growth model for FB, no? If it could be shown that facebook intentionally undervalued it in order to make this scheme work better for them, wouldn't the IRS have a case?

ksec 7y ago
>Isn't it true that a sale of IP should model the value of the IP over its lifetime in some reasonable way? There aren't any "correct" way to measure it, but most of these IP are likely on percentage based. Sort of like 5G patents where they collect percentage of revenue. So the value I guess they did in 2010 were calculated based on ( projected ) 2012 ( its IPO ) figure. I think judging by majority of comment most people forgot how Facebook perform after its IPO, how its growth wasn't there, how Facebook Gaming Saved it, and how Mobile Internet ( aka Smartphone ) really took off, how they went to Mobile ( App ) First before the term was hyped by SV, and how it has grown possibly beyond most people would imagine. And that is not just Facebook itself, but also Instagram. That is why I said comparing the value in absolute terms and not on relative terms doesn't make any sense. At least that is judging from the limited amount of information given out by this FoxBusiness article. So again lots of assumption involved.
- ska 7y ago
  Agreed, of course there isn't a "right" way. But companies should be internally consistent in how they do these things. So, I can imagine if you (as the IRS) can demonstrate that they used on method of doing this sort of thing for some stakeholders, but another for the sale to Irish subsidiary with no real justification ... you might just have an argument this was for tax avoidance purposes. Also I didn't mean to suggest that absolute value comparison was the right way to do this. Just that it is entirely plausible the FB intentionally lowballed the sale. It's clearly the reason these companies are in Ireland at all. Cases like this I suppose are about defining the line between "fair play" and not.

by ska 7y ago

ksec 7y ago

>Isn't it true that a sale of IP should model the value of the IP over its lifetime in some reasonable way? There aren't any "correct" way to measure it, but most of these IP are likely on percentage based. Sort of like 5G patents where they collect percentage of revenue. So the value I guess they did in 2010 were calculated based on ( projected ) 2012 ( its IPO ) figure. I think judging by majority of comment most people forgot how Facebook perform after its IPO, how its growth wasn't there, how Facebook Gaming Saved it, and how Mobile Internet ( aka Smartphone ) really took off, how they went to Mobile ( App ) First before the term was hyped by SV, and how it has grown possibly beyond most people would imagine. And that is not just Facebook itself, but also Instagram. That is why I said comparing the value in absolute terms and not on relative terms doesn't make any sense. At least that is judging from the limited amount of information given out by this FoxBusiness article. So again lots of assumption involved.

ska 7y ago
Agreed, of course there isn't a "right" way. But companies should be internally consistent in how they do these things. So, I can imagine if you (as the IRS) can demonstrate that they used on method of doing this sort of thing for some stakeholders, but another for the sale to Irish subsidiary with no real justification ... you might just have an argument this was for tax avoidance purposes. Also I didn't mean to suggest that absolute value comparison was the right way to do this. Just that it is entirely plausible the FB intentionally lowballed the sale. It's clearly the reason these companies are in Ireland at all. Cases like this I suppose are about defining the line between "fair play" and not.