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Coke?

https://archive.is/90Lrp

Barrons is reporting brk may owe 15 billion tax on its apple sales.

High class problem.

Coke ? lol ,no

15 billion out of the billions it will keep after taxes.

Is BRK showing weakness??

Do any of brks subs use these tax gimmicks? Who still reads the footnotes to brk filings? Now that Buffett no longer holds stocks, forever, what would be the potential tax liability if he sold down our 5 largest holdings? Thank you.

Barrons is reporting brk may owe 15 billion tax on its apple sales.


I know it may be shocking to some that realizing $73.7 Billion in taxable gains in the first six months of the year comes with a 20-21% cash tax bill, but don't feel too bad since Uncle Sam has to send $15 Billion of T-bill interest right back to Omaha over the course of a year.

It seems likely that Berkshire will owe more than $15 billion in cash taxes on the realized gains because they probably aren't finished selling. But 21% ain't bad if you're a trillionaire.

" It seems likely that Berkshire will owe more than $15 billion in cash taxes on the realized gains because they probably aren't finished selling. But 21% ain't bad if you're a trillionaire."

nola, once upon a time Buffett told us his desired holding period was, forever. It looks like he has now decided to pay 50 BILLION or so in taxes on realized gains in 2024. Are the BV calcs done after tax on half our unrealized cap gains or pre tax? Any idea if any of our other large public holdings or subs are using the tax gimmicks KO used? Thanks bud.

Do any of brks subs use these tax gimmicks?

Apple is not a sub, but they raised these international tax schemes to an art form of such complexity that is rarely seen in the modern world. The answer to your question is yes. Yes, they do.

" Apple is not a sub, but they raised these international tax schemes to an art form of such complexity that is rarely seen in the modern world. The answer to your question is yes. Yes, they do."

Thank you, so, is it possible Buffett is selling apple in a hurry because he thinks a huge tax case might be coming? Any thoughts with respect to whether any of our wholly owned subs might be using these tax avoidance gimmicks?

Buffett said holding was forever unless the story changed. Disney, Petro China, and McDonalds are some examples. It was also more or less meant for the companies they bought not the stocks in the portfolio.

" It was also more or less meant for the companies they bought not the stocks in the portfolio."

Do you recall Buffett's argument with the SEC for why brk shouldn't have to mark IBM?

Still was meant for the stock portfolio or when the story of why they bought changes .

Now that Buffett no longer holds stocks, forever

Buffett never said that their holding period IS forever, he said that their FAVORITE holding period is forever. That means that they have various holding periods, but the ones they like best are the companies that they could potentially hold forever.

" Buffett never said that their holding period IS forever, he said that their FAVORITE holding period is forever. That means that they have various holding periods, but the ones they like best are the companies that they could potentially hold forever."


I wonder how much capital gains tax brk has paid in the aggregate the past ten years? The past 20 years combined? He has now decided that paying 30-75 billion in tax in a year is fine. Seems like a dramatic change of thinking to me, but we shall see.

hclasvegas: It looks like he has now decided to pay 50 BILLION or so in taxes on realized gains in 2024.

This number looks way high. How are you calculating this capital gains tax bill?

" This number looks way high. How are you calculating this capital gains tax bill?'


How much more apple and BAC will he sell by year end? Will he sell other LT holdings? Does he think these tax rates are low, relative to what may be coming, if the Dems sweep? We shall see?

Berkshire, in its history until only recent years was capitalized as an entity less than the value of its Apple Holding.

There's no change in philosophy--just stock selection success beyond a reasonable expectation.

Berkshire has always lived by Mae West's motto that too much of a good thing--is wonderful. To a point. But 40% of one's investment portfolio may exceed even Mae West's standard.

No change in philosophy. Big change in price.

" No change in philosophy. Big change in price."

And apple is up big since he started to sell. How much he sells by year end remains to be seen. WHO KNOWS, he might shock us and sell some KO?

hclasvegas: It looks like he has now decided to pay 50 BILLION or so in taxes on realized gains in 2024.
...
This number looks way high. How are you calculating this capital gains tax bill?

The taxable amount is in the statements.
"Our sales of equity securities produced taxable gains of $59.6 billion in the second quarter and $73.7 billion in the first six months of 2024"

So, assuming that there are no related tax credits, I presume the tax is the headline 21% rate on that.
So, roughly:
Tax due to stock sales = about $12.5 billion in the second quarter and about $15.5 billion in the first six months of 2024.

It's still a lot of tax.

The only logical interpretation that I see is that management believed that the most likely medium-to-long run upside from the after tax proceeds from the sales was more than the medium-to-long run upside from the before-tax Apple stock at the realized price. Berkshire probably took on a tax liability of around $33 per share sold. (cost basis $34.26, selling at prices around $190?) So, by extension, Mr B thought he could make more money from ~$157 in cash than he could from an Apple share.

Apple not demonstrably worth its current quote? Going to a abnormally large cash allocation this year isn't such a terrible idea?
The explanation is simple: he's been reading my posts : )

Jim

hc: It looks like he has now decided to pay 50 BILLION or so in taxes on realized gains in 2024.
...
This number looks way high. How are you calculating this capital gains tax bill?

jim: The taxable amount is in the statements.
"Our sales of equity securities produced taxable gains of $59.6 billion in the second quarter and $73.7 billion in the first six months of 2024"


The difference is between 'taxable gains' and 'taxes on gains'. The latter is now up to about $74b, and may presumably go higher, and the former is about 21% of $74b, i.e. $15.5b, and will also go higher, by the end of the year, although I think it is very unlikely that it will ever get to $50b.

$50b in capital gains taxes would imply another $90.6 in GAINS beyond the $73.7b in the first half of the year. Selling all the remaining Apple shares (something Buffett has said he wouldn't do) would 'only' generate another $15.8b in capital gains, taxes, for instance.

dtb

First, I must mention that WEB and Charlie have showed remarkable discipline in sticking to the foundational principles that BRK has been built upon, even in light of their extended ages.
Most mere mortals would have spent the past years, particularly given the huge cash pileups, making one last huge swan song bet.
The fact that the cash has been allowed to pile up, with a huge chance that WEB may not have the opportunity to ever put it to work while he is around, speaks to this discipline.

All that being said, it would be really irresponsible to leave the next generation of leadership with this massive outsized position that puts them in a no win situation just as they are coming to bat.
If the new leadership keep Apple and it goes down, they lose.
If they sell Apple and it goes up, they lose.
If they keep apple and it goes sideways for 10+ years ala Coke, they lose.

As others have mentioned, this crazy position was simply the result of a spectacular investment that was successful on a scale maybe never before seen in the financial markets.
Given the high PE, WEB seems to be doing the prudent thing by cashing in his chips.

And by the way...in the stock market, you have to feed the ducks while they are quacking.
The only thing more spectacular than BRK's buy was the incredible exit of this massive stake as prices continue to rise.
An almost impossible feat, actually most would say it IS impossible before WEB's miraculous trade.

And lastly...let's not forget that Apple is not some rare 1 of 1 Van Gogh painting that once sold, cannot be bought again.
Shares are openly available on the market at any time in the future if valuations become attractive.
This is not a burn the bridges decision.

The only thing more spectacular than BRK's buy was the incredible exit of this massive stake as prices continue to rise.
An almost impossible feat, actually most would say it IS impossible before WEB's miraculous trade.

Now that you mention it, even having sold only a bit over half, in terms of gross profit just the half sold calculated as [scale * [sell price - entry price]] is probably the best single trade of all time to date anywhere, by quite a margin. One doesn't typically think of Mr Buffett as a "trader", but that doesn't actually mean he isn't incidentally the world's best at it.

Perhaps I've missed some other big trade more profitable, but I can't think of one. On Black Wednesday Mr Soros made his fame by making around $1bn on the sterling trade, which pales by comparison. Mr Bury made a little less for his clients in the credit crash. Did no other single trade ever come within an order of magnitude?

Jim

" The only thing more spectacular than BRK's buy was the incredible exit of this massive stake as prices continue to rise.'

HOLD IT, aren't the buyers paying up into Buffett's selling? Are we that certain Buffett is the smartest guy at the table? Patience?

Did no other single trade ever come within an order of magnitude?

Maybe John Paulson in the GFC.

The only thing more spectacular than BRK's buy was the incredible exit of this massive stake as prices continue to rise.

I posted about this elsewhere. The release of about 500M Apple shares to the float over a few short months WHILE Apple stock rose from the 160s to the 220s is a HUGE testament to the strength of Apple. I don't think that has ever been seen before.

“ I posted about this elsewhere. The release of about 500M Apple shares to the float over a few short months WHILE Apple stock rose from the 160s to the 220s is a HUGE testament to the strength of Apple. I don't think that has ever been seen before.” PLUS, the seller is Buffett, amazing.

The only thing more spectacular than BRK's buy was the incredible exit of this massive stake as prices continue to rise.

I posted about this elsewhere. The release of about 500M Apple shares to the float over a few short months WHILE Apple stock rose from the 160s to the 220s is a HUGE testament to the strength of Apple. I don't think that has ever been seen before.



More likely is that the period where Apple went sideways as the mag7 went up was influenced by Berkshire's selling. Then Berkshire slowed down or stopped selling (perhaps at the nice round even number of 400m shares - exactly the same number as Coke?) and that allowed Apple shares to finally move higher.

During the 2nd quarter, the average price Berkshire got for selling the AAPL stock was approx. $188.40 / share.

During the 2nd quarter, the average price Berkshire got for selling the AAPL stock was approx. $188.40 / share.

I meant to add that those shares had a cost basis of approx. $38.47 / share for those that are curious.

Actually it's lower at $34.25

Actually it's lower at $34.25

Is that for the shares sold in Q2? What is the source of that figure? I used the figure for National Indemnity AAPL shares sold during the quarter, which isn't the entire sale, but most of it. Is you figure for the 1st 6 months? Or the entire AAPL position at average cost?

Actually it's lower at $34.25
...
Is that for the shares sold in Q2? What is the source of that figure?

The $34.25 is right.
The best source is the 2021 annual report, as I believe there were no material buys after that date. That says 907,559,761 shares were owned beneficially for a total cost of $31,089 million, which is $34.2556 per share. I guess you could subtract the after-tax amount of all dividends received to date, if you wanted to figure out the breakeven spot.

There is no need to try to figure out which subsidiary it took place in. The shares are fungible, so the only thing that matters is the average price paid. As a general rule, this is true for every purpose except a US individual tax return, I think : )
It does get complicated if you do alternating purchases and sales, but that isn't really the case here.

Jim

OK I understand that. That was an average cost basis for the entire position at one point when they held 907m shares. I was using the cost basis for the actual shares sold during the 2nd quarter.

I don't remember if the shares sold in the first quarter were higher basis or lower than the q2 sold shares. Usually I would assume he would sell higher basis shares first and defer the lowest basis shares the longest - but he has some opinion on the future of corporate tax rates so he may think about it differently.

More likely is that the period where Apple went sideways

Nope. The selling started in Q1. In fact, 116 million of those Apple shares were sold in Q1. And then the selling continued into Q2 with another 389 million shares sold. The price in Q1 started at about $185 and ended at about $171.

During the 2nd quarter, the average price Berkshire got for selling the AAPL stock was approx. $188.40 / share.

This reinforces my point even more! They sold a bunch in Q1, then sold a bigger bunch in Q2 at $188 or so. And nevertheless, through that period until now the stock somehow managed to rise to $224 or so! So the market absorbed 505 million additional shares AND the price rose over $30 over the period. To me, that is astounding and a sign of resilience.

Re: nope

Doesn’t that sounds like sideways until BRK stopped the selling pressure? What am I missing? Maybe you have a different definition of sideways

Doesn’t that sounds like sideways until BRK stopped the selling pressure?

First of all, how can you tell what date Berkshire stopped selling? I don't think that was disclosed anywhere. Second of all, the stock rose pretty steadily through all of Q2 beginning at about 170 and ending at 210 or so. Thirdly, AFTER the news was released of the massive selling by Berkshire, the stock continued upwards to where it is today.

That's not sideways in any sense of the word.

“ First of all, how can you tell what date Berkshire stopped selling? “ Form 4s disclose the info.

“ First of all, how can you tell what date Berkshire stopped selling? “ Form 4s disclose the info.

Berkshire never owned 10% of Apple so they don't have to report like that. All we know is the average price BRK sold Apple stock for in the first quarter (approx. $173 / share) and in the second quarter (approx. $188.4 / share) - which indicates that they were selling when AAPL was stuck going sideways while big cap tech was rallying.

After that, AAPL shares caught up to the QQQ. Maybe that's a coincidence and the market was just super jazzed about some AI announcement.

AAPL was stuck going sideways while the QQQ rallied - there was a major daily seller at X% of the average daily volume throughout that period.

Form 4s disclose the info.

Pretty sure they do not. I think they disclose what insiders are doing, not what Berkshire is doing.

<<First of all, how can you tell what date Berkshire stopped selling?>>

Form 4s disclose the info.

There were a total of 11 form 4's filed during Q2. All the form 4's filed regarding Apple stock can be found at this link -

https://www.sec.gov/edgar/browse/?CIK=320193&owner...

Can you tell us which one shows the date that Berkshire stopped selling? Thanks in advance.

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