Uncle Warren Unhappy With WSJ Claims He Pays Only 10.5% Tax On BofA Dividend; He Really Is Paying A Whopping 14.175%

Tyler Durden's picture

Kindly-looking, ukulele strumming, no tax paying, birthday celebrating, grandfather figure Warrenn Buffett is angry...

Omaha, NE (NYSE: BRK.A; BRK.B)—An editorial in today’s Wall Street Journal says that “Berkshire Hathaway will enjoy an effective tax rate of 10.5% on the $300 million in dividends it will receive each year from Bank of America.” That statement is incorrect.

 

Virtually all of the stocks that Berkshire owns are held in its property-casualty subsidiaries, and that will be the case with the Bank of America preferred.

 

The tax treatment for dividends paid by U.S. corporations to property-casualty insurance companies was materially changed by a law passed in 1986. The changes were described in detail in the chairman’s letter included in Berkshire’s 1986 annual report.

 

A minor change in rate was made in 1993. Since that time dividends that insurers receive from U.S. companies incur an effective tax rate of 14.175%. For Berkshire, that rate will apply to dividends it receives from Bank of America.

Well... glad we cleared that up.