SecProbe.io

May 7 , 2015

Daniel H. Schulman
President
PayPal Holdings, Inc.
2211 North First Street
San Jose, California 95131

John J. Donahoe
Chief Executive Officer
eBay Inc.
2065 Hamilton Avenue
San Jose, California 95125

Re: PayPal Holdings, Inc.
 Amendment No. 1 to Form 10-12B
Filed April 9, 2015
File No. 001 -36859
eBay Inc.
Form 10 -K for Fiscal Year Ended December 31, 2014
Response dated April 9, 2015
File No. 000 -24821

Dear M essrs . Schulman and Donahoe :

We have reviewed  your April 9, 2015 response to our comment letter and have the
following comments.  In some of our comments , we may ask you to provide us with information
so we may better understand your disclosure.

Please respond to these comments  within ten busine ss days by providing the requested
information or advis e us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your r esponse.

After reviewing your response to these  comments, we may have additional comments.
Unless we note otherwise, our references to prior comments are to comments in our March 27,
2015 letter .

Daniel H. Schulman
PayPal Holdings, Inc.
John J. Donahoe
eBay Inc.
May 7, 2015
Page 2

 PayPal Holdings, Inc. Amendment No. 1 to Form  10-12B filed April 9, 2015

Exhibit 99.1

PayPal, page 7

1. We note your response to comment 2.  Your current disclosure indicates that a market
may be something other than an individual country, but it does not clearly explain under
what circumstances you have defined a market as something other than an individual
country.  In light of the focus that your filing places on the number of markets in which
you operate, please explain this matter to us in more detail, and revise your disclosure to
better explain  this matter to your investors.

Selected Historical Combined F inancial Data of PayPal, page 50

2. We note your response to comment 4.  Please revise your introductory paragraph to the
selected financial data to discuss the pro for ma financial information an d state from
where it was derived.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements, page 54

3. Footnote (a) appears to indicate that you will earn lower revenue  from eBay after the
separation.  Please explain to us in more detail why you will earn lower revenue  from
eBay for your payment services  after the separation.  Additionally, please revise this
footnote to either disclose  more information about this reduct ion in revenue from eBay or
provide a cross -reference to another location in your filing where you have discussed this
matter.

4. Please refer to the third sentence of footnote (b).  Please tell us whether the statement
“these expenses were historically elim inated in eBay’s consolidated financial statements”
indicates that eBay’s consolidated financial statements did not capture the costs incurred
by the consolidated company related to Buyer Protection Losses and Buyer Protection
Services.  If so, please tell  us the basis in GAAP for not reflecting these expenses in
eBay’s consolidated financial statements.  If not, please revise your footnote to better
explain this matter.

Business, page 55

5. We note your response to comment 12.  Please revise the disclosure in your registration
statement to clarify the role of both Braintree and Venmo in your business.  Please also
explain how these acquisitions “strengthened” your business if “nearly all of the services
provided by Braintree and Venmo are provided by other P ayPal products.”

Daniel H. Schulman
PayPal Holdings, Inc.
John J. Donahoe
eBay Inc.
May 7, 2015
Page 3

 Protecting Merchants and Consumers, page 60

6. We note your response to comment 16.  Please revise the disclosure in your registration
statement to clarify the basis for your statement that your protections for merchants and
consumers “are generally much broader than those protections provided by other
participants in the payments industry.”

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources, page 77

7. We note your response to comment 21.  We also note that you continue to list funding
through your strategic and financial partners as a possible source of future funding on
pages 77 and 78.  Please revise your disclosure to better explain who your strategic and
financial partne rs are other than eBay, as we believe this may be unclear to your
investors.

Combined Statement of Income, page F -4

8. We note your response to comment 24 and have the following comments:

 It appears from your response that the costs classified by eBay as y our cost of
services are presented on your income statement as transaction expense and customer
support and operations.  It also appears that you could present these two line items
directly below net revenue and then present a subtotal which would appropri ately
capture your gross profit.  Please confirm these assumptions, if true, or explain thi s
matter to us in more detail; and
 Additionally, please tell us in more detail why you do not believe gross profit is a
meaningful measure of performance for a compa ny such as PayPal.  Please note that
we would not object to your presentation of more than one line item within the cost of
services category of expenses.

Notes to Combined Financial Statements

Note 1 – Overview and Summary of Significant Accounting Pol icies, page F -8

9. We note your response to comment 23.  If you do not include audited financial statements
of PayPal please revise  your disclosures concerning PayPal here or in another footnote to
the predecessor’s financial statements to clearly state, if true, that PayPal has not
commenced operations and has no assets or liabilities.  Additionally, please confirm our
assumption, if true, that PayPal has no commitments or contingent liabilities.

Daniel H. Schulman
PayPal Holdings, Inc.
John J. Donahoe
eBay Inc.
May 7, 2015
Page 4

 10. We note your response to comment 26.  You state in your respo nse that revenues earned
from eBay and its subsidiaries were excluded from net revenues of the Payments segment
presented in eBay’s Form 10 -K.  However, we note that you disclose a line item on page
F-18 of eBay’s Form 10 -K for the fiscal year ended Decemb er 31, 2014 (“eBay 2014 10 -
K”) entitled “[e] liminati on of inter -segment net revenue.”  We have the following
comments:

 Please tell us what is included in the “[e] liminati on of inter -segment net revenue” line
item, whether revenues earned from other operat ing segments of eBay were included
in the revenues presented for each of eBay’s reportable s egments, and if so the
amounts;
 Please also tell us how eBay complied with ASC 280 -10-50-22, which requires the
disclosure of revenues from external customers as well as revenues from other
operating segments if the amounts are included in the determination of operating
income (loss) or are otherwise re gularly provided to your CODM;
 We note your disclosure on page F -30 that you recorded revenues of $113 million
that were earned from eBay and its subsidiaries for the year ended December 31,
2014, which is larger than the $57 million of intercompany revenues that were
eliminated from total reportable segment revenues to arrive at consolidated eBay net
income.  Please tell us why the amount eliminated is less than the amount your
Payments segment earned from eBay and its subsidiaries; and
 Please provide us with a reconciliation  from the amount of net revenues for the year
ended December 31, 2014 of the Payments segment presented in the eBay 2014 10 -K
to the amount of PayPal Inc. net revenues presented in the Information Statement.

Note 11 – Related Party Transactions, page F -29

11. We note your disclosure on page F -30 that you recover certain costs  from eBay relating
to customer protection programs that are recorded as reductions to transacti on losses,
customer support and operations and general and administrative expenses.  Please tell us
more about these programs, and specifically if you are rende ring a service for which out -
of-pocket costs are being reimbursed to you by eBay.  Additionally, please tell us in
detail why presentation of these reimbursements  as contra expenses is appropriate, citing
relevant U.S. GAAP in your response.  Lastly, in th e context of these contra expenses,
please tell us whether you believe PayPal’s historical financial statements as presented in
this Form 10 repres ent all costs of doing business.  Refer to SAB Topic 1:B.1.

eBay Inc. Form 10 -K for Fiscal Year Ended Decemb er 31, 2014

General

12. The written representations we requested in our prior letter were to be from the
Company.  However, your response letter was from your external counsel.  Please

Daniel H. Schulman
PayPal Holdings, Inc.
John J. Donahoe
eBay Inc.
May 7, 2015
Page 5

 provide the representations previously requested in a written statement f rom the
Company.

13. A Settlement Agreement by and between the Department of the Treasury’s Office of
Foreign Assets Control (OFAC) and PayPal dated March 23, 2015 indicates that your
subsidiary PayPal processed transac tions involving Cuba and Sudan.   We note  also that
recent news reports suggest that items recently taken from Syria are being sold on eBay
and that PayPal is being used to send money to Syria.

Cuba, Sudan and Syria are designated by the Department of State as state sponsors of
terrorism, and ar e subject to U.S. economic sanctions and export controls.   Please
describe to us the nature and extent of your past, current, and anticipated contacts with
Cuba, Sudan and Syria, whether through subsidiaries, affiliates, partners, joint ventures or
other d irect or indirect arrangements.   In this regard, we note your disclosure, on pages 42
and F -31 of the 10 -K, regarding PayPal’s activities that may have violated OFAC
sanctions regulations.   You should describe any services, products, information or
technol ogy you have provided to Cuba, Sudan or Syria, directly or indirectly, and any
agreements, commercial arrangements, or other contacts you have had with the
governments of those countries or entities they control.

14. You disclose on pages 42 and F -31 PayPal’s  settlement discussions with OFAC regarding
possible violations of sanctions regulations arising from PayPal’s practices between 2009
and 2013.   You also disclose that PayPal has reported to OFAC more recent transactions
that may have violated sanctions re gulations.   To the extent the possible violations you
disclose are not covered by the March 23 Settlement Agreement, please tell us the nature
of the possible violations, including the countries involved, and the maximum amount of
the OFAC penalties to whi ch PayPal may be subject as a result of the possible violations.

15. Please discuss the materiality of any contacts with Cuba, Sudan and Syria you describe in
response to the comments above, and whether those contacts constitute a material
investment risk f or your security holders.   You should address materiality in quantitative
terms, including the approximate dollar amounts of any associated revenues, assets, and
liabilities for the last three fiscal years and the subsequent interim period.   Also, address
materiality in terms of qualitative factors that a reasonable investor would deem
important in making an investment decision, including the potential impact of corporate
activities upon a company's reputation and share value.   Various state and municipal
governments, universities, and other investors have proposed or adopted divestment or
similar initiatives regarding investment in companies that do business with U.S. -
designated state sponsors of terrorism.   You should address the potential impact of the
investor sentiment evidenced by such actions directed toward companies that have
operations associated with Cuba, Sudan and Syria.

Daniel H. Schulman
PayPal Holdings, Inc.
John J. Donahoe
eBay Inc.
May 7, 2015
Page 6

 Item 9A: Controls and Procedures, page 72

16. We note in your response to comment 34 that the internal control relevant to the
accounting error was a quarterly analysis to support the booking or release of a valuation
allowance.   You state that deficiency was in the control design as this was a complex
intercompany transaction that had non -routine tax accounting implications. You s tate that
the maximum exposure of the control failure was not material and refer to the amount of
valuation allowances on capital loss carryover and operating loss carryforward. Please
address the following:

 Describe in greater detail the specific nature and design of the control that
failed.   Also as it relates to the precision of the control, describe how the review
control was appropriately executed even though the accounting litera ture was
incorrectly applied;
 Explain how the design of the control “did  not extend to include full documentation
of the resulting tax accounting consequences that would be required under ASC   740
– Income Taxes.”   Include also a detailed discussion of the nature and cause of the
control deficiency;
 Describe in detail your eva luation of the severity of the control deficiency identified
in your response and how it considered whether it was reasonably possible that the
identified control deficiency would fail to prevent or detect a material
misstatement.   Refer to the factors beg inning on page 35 of SEC Release No. 33 -8810
“Commission Guidance Regarding Management’s Report on Internal Control Over
Financial Reporting Under Section 13(a) or 15(d) of the Securities Exchange Act of
1934 ”;
 Tell us which COSO component(s) were affected  by the control deficiency.   In
addition, tell us how you evaluated whether there were any deficiencies in your risk
assessment controls and processes resulting in the error and, if so, how you evaluated
the severity of those deficiencies; and
 Tell us if you made or plan to make changes or improvements in your internal control
over financial reporting (ICFR) as a result of the identification of the error, and what
those changes are.

Form 10 -Q for the Quarterly Period Ended March 31, 2015

Notes to the Con densed Consolidated Financial Statements

Note 9 – Commitments and Contingencies, page 20

17. We note your responses to comments 28 and 33.  As comment 28 was also applicable to
eBay, please tell us why you have not revised your commitments and contingencies
footnote to describe and quantify your exposure under the buyer and seller protection
programs , and confirm to us you will include it in any applicable future filings.  You also

Daniel H. Schulman
PayPal Holdings, Inc.
John J. Donahoe
eBay Inc.
May 7, 2015
Page 7

 make reference in your response to certain disclosures in MD&A related to thes e
programs.  While we do not object to the discussion and analysis of the impact of these
programs in MD&A, the disclosure requirements of ASC 460 -10-50 are required to be
included in your financial statements. Lastly, in your response, please also show us  what
your disclosure would have looked like had it been included in your most recently filed
Form 10 -Q.

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

General and Administrative, pag e 37

18. We note your disclosure on pages 28, 29 and 37 related to the restructuring costs
associated with your global workforce reduction plan.  To the extent material, the
expected effects on future earnings and cash flows resulting from the plan (for examp le,
reduced employee expense) should be quantified and disclosed, along with the initial
period in which those effects are expected to be realized.  This includes whether the cost
savings are expected to be offset by anticipated increases in other expenses  or reduced
revenues.  Please revise future filings to discuss these impacts and show us in your
response what your discl