01.04.201302:57:59UTC+00Facebook's Zuckerberg may encounter $1 billion tax hit, reports says

Facebook CEO Mark Zuckerberg may possibly pay a tax bill of more than $1billion, according to reports.

Zuckerberg encounters the liability because he practiced options for 60 million Facebook shares at a strike prices of 6 cents a share on the day of the Internet firm’s IPO last year, CNN Money reported.

Even if the shares aren’t sold, they’re considered as ordinary income under IRS policy. That gave Zuckerberg earnings from the options alone of $2.3 billion last year, based on the report. Figure a federal tax of 35% and California rate of 13.3%, and 48.3% of the gain would go for taxes.

Zuckerberg does have some deductions, however, most notably a $500 million donation to the Silicon Valley Community Foundation.

Facebook co-founder Eduardo Saverin surrender his U.S. citizenship last year to move to Singapore ahead of the IPO, in a move acknowledged by many as an effort to abstain from huge taxes.