Ep. 072 · Meta × The IRS · October 4, 2026 · 1:44

The Grant

For 2012 and 2013, Meta counted four point one billion dollars of Mark Zuckerberg’s stock-option income as research wages on its tax forms — classifying the chief executive as a researcher — and claimed about three hundred fifty-five million in federal R&D credits. The IRS is fighting it in Tax Court, where Meta’s argument includes that the year that matters is 2005: the year the options were granted, when Zuckerberg personally wrote the code and oversaw all of Facebook’s development. Under oath, Mark walks the government’s counsel through the filings, the replication, and a settlement paid in 2005 dollars. The record is from 2005.

🔊 The Grant — Mark × the IRS CounselMark Zuckerberg & the IRS Counsel · VoxCPM2 on the Mac mini Neural Engine · cfg 3.0 · 1:44

NARRATOR: The IRS is suing Meta over four point one billion dollars the company filed as research wages. Meta's researcher testifies today.

COUNSEL: Mr. Zuckerberg, 2012. You were chief executive of Facebook.

MARK: In 2005 I wrote the code personally.

COUNSEL: The question was 2012.

MARK: 2005 is the year that matters. It's in the filings.

COUNSEL: The filings also classify you as a researcher.

MARK: Four point one billion in research wages. Very competitive program. I ran against myself and won.

COUNSEL: And what did you research?

MARK: The Like button. A longitudinal study. People enjoy clicking. That's science.

COUNSEL: The options were granted in November 2005.

MARK: Ten million options. By publication they'd replicated to a hundred and twenty million shares. The research multiplied. That's how you know it's working.

COUNSEL: You oversaw sales. Security. Content moderation.

MARK: In 2005 I oversaw all of it. Everything since is replication.

COUNSEL: The IRS calls your stock income compensation. Not wages for science.

MARK: Options are theories about the future. Theories are research. We were extremely theoretical.

COUNSEL: The government offers to settle for the full three hundred fifty-five million.

MARK: In 2005 dollars.

COUNSEL: ...The IRS accepts payment in 2005 dollars.

MARK: Meta accepts. We'll invoice the court for the conversion study.

COUNSEL: Let the record show today's date.

MARK: The record is from 2005. The year that matters.

COUNSEL: Sustained.

NARRATOR: The settlement holds. Both sides dated it 2005. Nobody dared check the math.

The facts underneath

Sources: Yahoo Finance — for 2012 and 2013, Meta counted $4.1 billion of Mark Zuckerberg’s stock-option income as research wages on its tax forms, classifying the chief executive as a researcher, per U.S. Tax Court filings · Yahoo Finance — the classification produced about $355 million in federal R&D tax credits, which the IRS is contesting · Moneywise — the research-wages classification and the credit fight · NRB (Oct 3, 2026) — Meta faces the IRS fight over the $355 million tax break in Tax Court · KuCoin News — the $355M cut via the researcher classification · Bloomberg Tax — Meta and the IRS seek a ruling on the stock-option credit; the options were granted in November 2005 and grew to about 120 million shares after stock splits · Tax Notes — Facebook seeks summary judgment on the stock-option issue; Meta’s argument includes that the year that matters is 2005, when Zuckerberg “personally wrote software code” and oversaw all of Facebook’s development · Kashmir Hill, NYT — on the researcher classification: “absolutely bonkers”.

The case is Facebook Inc. v. Commissioner, No. 12738-18 (U.S. Tax Court), with cross-motions for partial summary judgment pending and undecided as of October 4, 2026. The research credit under IRC §41 turns on which wages count as qualified services; Meta’s filings count the CEO’s option income among the research wages for 2012 and 2013, the same years the company booked a net income of about $6 billion across the two years. The options at issue were granted in November 2005, six months after the IPO registration, at a par value exercise price; the shares split 4-for-1 in 2012 and 3-for-1 in 2016, and 10 million options replicated the way options do.