No. of Recommendations: 12
Is it possible that under the newer tax rules that impact unrealized gains and maybe 2 year rolling calculations? (I don't have specifics)
Basically, with the large increase in 2024 of the investment portfolio might BRK have triggered a new large accelerated tax so Buffet is selling to offset the penalty tax with actual owed taxes under the traditional tax system.
This is an interesting thought. I had assumed that comments about tax rates were about the headline general corporate tax rate that Berkshire pays on stock sales, which dropped to 21% with the TCJA. I think that rate might settle around 25% in future, but that difference doesn't seem enough to explain a $100bn allocation change.
However, I had forgotten about the alternative minimum tax which may apply to unrealized profits. From reading Berkshire's reports, it seems that the implementation is still vague enough that nobody knows what if anything Berkshire will pay on that front, so maybe the Apple sale interacts with those new rules, or anticipations of the new rules, in some way?
e.g., it's theoretically possible one might have reasoning like this: If you have unrealized gains on something more than fully valued, and are going to have to pay tax this year on that gain even if it isn't sold, you might as well go ahead and sell it. The tax from a sale decision would not be incremental, so would not be a factor in the decision. This would in general lead to more portfolio turnover.
Jim
