Meta Platforms Inc.‘s Facebook and the IRS filed cross-motions in US Tax Court arguing that the law is on their side as to whether the company can claim CEO Mark Zuckerberg‘s stock options as part of its research tax credits.

Meta filed a petition in 2018 in a longstanding dispute over the credits for wages paid for employee research, which the Facebook parent claimed for the 2012 and 2013 tax years.

The company asserts that that the $4.1 billion in stock-based compensation that Zuckerberg took in those years constitutes wages for qualified research that he conducted, under IRC Section 41(b)(2)(A)(i). Meta claimed a total of $618 million in research credits for the two years, about $355 million of which was based on the stock options.

But the parties dispute what services govern that determination—Meta argued the court should look to the grant year of the stock options, which was 2005, while the IRS said the credits must be determined during the stock options’ vesting period, which was January 1, 2008 through November 1, 2010.

Zuckerberg’s actions in 2005 also shouldn’t matter, the IRS said, because the language of the stock options suggests they’re not compensation at all.

The case is one of two Meta disputes before the Tax Court. The other involves transfer pricing arrangements between the company and an Irish subsidiary.

In its motion for partial summary judgment, Meta said it was following IRS advice when it claimed the credits. The agency’s subsequent arguments to the contrary “departed from his own long-held position for a single Facebook employee, Mark Zuckerberg,” and that it “continues to take a position contrary to his own guidance,” the company said.

Zuckerberg “personally wrote software code” and “oversaw all development of Facebook’s technology” in 2005, when the stock options were first created, Meta argued. The plain language of the code speaks to his active role in company development, and so supports the claim for credits, it said.

“From the inception of Facebook until today, Mr. Zuckerberg has been responsible for setting the overall direction and product strategy for the company,” the motion says. “He has always led the design of Meta’s services and the development of its core technology and infrastructure.”

But the IRS cited the contract granting Zuckerberg the stock options, which states that the options are “not as consideration for services you rendered to the Company prior to your Vesting Commencement date.”

“The unambiguous terms of the Option provide that it was not granted as consideration for services rendered prior to January 1, 2008,” the IRS said in its motion. “Therefore, Mr. Zuckerberg’s services during 2005 do not dictate whether the Option and resulting Spread Income were wages paid for qualified employment services within the meaning of section 41.”

Baker & McKenzie LLP represents Facebook.

The case is Facebook Inc. v. Commissioner, T.C., No. 12738-18, cross motions filed 5/30/25.