tag:blogger.com,1999:blog-4359768134121369324.post7604897991899994800..comments2023-09-01T05:45:10.958-04:00Comments on American Patriot: Dumb Quote of the WeekThe Patriothttp://www.blogger.com/profile/15959310446519357593noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-4359768134121369324.post-71596098217678811272011-10-13T14:37:22.166-04:002011-10-13T14:37:22.166-04:00Buffett is irrelevant as far as I am concerned. He...Buffett is irrelevant as far as I am concerned. He is a tool of Obama, nothing more.THE ANTI LIBERAL ZONEhttps://www.blogger.com/profile/15495366085857691285noreply@blogger.comtag:blogger.com,1999:blog-4359768134121369324.post-55269081899456176012011-10-13T13:41:56.694-04:002011-10-13T13:41:56.694-04:00Warren Buffett's letters to Berkshire Hathaway...Warren Buffett's letters to Berkshire Hathaway shareholders are instructive on how much thinking goes in to avoiding taxes. Here is <a href="http://www.berkshirehathaway.com/2000ar/2000letter.html" rel="nofollow">one example from 2000</a>:<br /><br /><b>But there’s also a powerful financial reason behind the preference, and that has to do with taxes. The tax code makes Berkshire’s owning 80% or more of a business far more profitable for us, proportionately, than our owning a smaller share. When a company we own all of earns $1 million after tax, the entire amount inures to our benefit. If the $1 million is upstreamed to Berkshire, we owe no tax on the dividend. And, if the earnings are retained and we were to sell the subsidiary -- not likely at Berkshire!-- for $1 million more than we paid for it, we would owe no capital gains tax. That’s because our "tax cost" upon sale would include both what we paid for the business and all earnings it subsequently retained.</b><br /><br /><br /><b>Contrast that situation to what happens when we own an investment in a marketable security. There, if we own a 10% stake in a business earning $10 million after tax, our $1 million share of the earnings is subject to additional state and federal taxes of (1) about $140,000 if it is distributed to us (our tax rate on most dividends is 14%); or (2) no less than $350,000 if the $1 million is retained and subsequently captured by us in the form of a capital gain (on which our tax rate is usually about 35%, though it sometimes approaches 40%). We may defer paying the $350,000 by not immediately realizing our gain, but eventually we must pay the tax. In effect, the government is our "partner" twice when we own part of a business through a stock investment, but only once when we own at least 80%.</b><br /><br />Clever? Yes. Legal? Presumably. Out of reach most people. Definitely.Sinan Unurhttp://blog.qtau.comnoreply@blogger.com