Anyone familiar with Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) probably knows it owns a bunch of individual stocks largely hand-picked by former CEO Warren Buffett, or more recently, with some input from current CEO Greg Abel.
Have you ever thought about how these holdings are taxed though? It's not like a mutual fund or exchange-traded fund, which require a yearly reckoning. As a C corporation, Berkshire's stock holdings are taxed much like an individual investor's are. That is, the capital gains tax bill is incurred for the tax year in which the ****** et is sold.
Missed AI's "Act 1"? Act 2 Could Be 16x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our ****** ysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Regardless, there's a pretty big future tax liability sitting on Berkshire's books right now. Just don't worry about it if you're a shareholder. It's unlikely you'll even notice when the time comes to sell any of these positions.
As of the middle of this year, Berkshire Hathaway was sitting on $323.8 billion worth of individual stocks, including Coca-Cola, Apple, and American Express. It only paid a total of $106.5 billion for these picks over the course of the past many years, however, translating into unrealized net gains of $217.3 billion that will eventually become realized, taxable gains. For perspective on that figure, Berkshire's total market cap at the time was $1.1 trillion. All of these numbers have changed somewhat since then, although not by much.
#individual
Have you ever thought about how these holdings are taxed though? It's not like a mutual fund or exchange-traded fund, which require a yearly reckoning. As a C corporation, Berkshire's stock holdings are taxed much like an individual investor's are. That is, the capital gains tax bill is incurred for the tax year in which the ****** et is sold.
Missed AI's "Act 1"? Act 2 Could Be 16x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our ****** ysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Regardless, there's a pretty big future tax liability sitting on Berkshire's books right now. Just don't worry about it if you're a shareholder. It's unlikely you'll even notice when the time comes to sell any of these positions.
As of the middle of this year, Berkshire Hathaway was sitting on $323.8 billion worth of individual stocks, including Coca-Cola, Apple, and American Express. It only paid a total of $106.5 billion for these picks over the course of the past many years, however, translating into unrealized net gains of $217.3 billion that will eventually become realized, taxable gains. For perspective on that figure, Berkshire's total market cap at the time was $1.1 trillion. All of these numbers have changed somewhat since then, although not by much.
#individual
16 hours ago
