[manaboutown]

Warren Buffett has been selling large amounts of AAPL and BAC stock from the BRK portfolio. No doubt one reason is to lock in gains while the market remains overpriced as well as rebalance the BRK portfolio which at one time was over 50% AAPL but I feel an additional reason is that he sees LTCG tax rates substantially increasing by 2026. So do I.

As an aside he has built up quite a war chest to buy when the time is right IMHO.

Thoughts?

[OrangeBlossomBaby]

Originally Posted by manaboutown

Warren Buffett has been selling large amounts of AAPL and BAC stock from the BRK portfolio. No doubt one reason is to lock in gains while the market remains overpriced as well as rebalance the BRK portfolio which at one time was over 50% AAPL but I feel an additional reason is that he sees LTCG tax rates substantially increasing by 2026. So do I.

As an aside he has built up quite a war chest to buy when the time is right IMHO.

Thoughts?

I think Warren Buffett is 94 years old, and preparing to cash out of the earthly plane. He knows he can't take it with him. He's stated many times that he wants to give most of it away. He's already given away billions over his lifetime. He also has kids and grandkids to inherit whatever is left over after he gives away the bulk of his estate.

"When the time is right" doesn't really mean much when you're 94 years old.

[tophcfa]

Given our countries ever escalating unsustainable debt, taxes only have one direction to go. Since capital gains generally are associated with higher wealth status, that particular tax will be a politically palatable option.

[tophcfa]

Originally Posted by OrangeBlossomBaby

I think Warren Buffett is 94 years old, and preparing to cash out of the earthly plane. He knows he can't take it with him. He's stated many times that he wants to give most of it away. He's already given away billions over his lifetime. He also has kids and grandkids to inherit whatever is left over after he gives away the bulk of his estate.

"When the time is right" doesn't really mean much when you're 94 years old.

Hmmm, the stock referenced in this thread, that Buffet is liquidating, is owned by BRK, and he is the CEO of that company. That has nothing to do with how he manages the assets in his personal estate. As the CEO of Berkshire Hathaway, he has a responsibility to do what he feels is right for the constituents of the company, not himself. The time horizon of his personal estate and BKR are mutually exclusive.

[Boomer]

Originally Posted by manaboutown

Warren Buffett has been selling large amounts of AAPL and BAC stock from the BRK portfolio. No doubt one reason is to lock in gains while the market remains overpriced as well as rebalance the BRK portfolio which at one time was over 50% AAPL but I feel an additional reason is that he sees LTCG tax rates substantially increasing by 2026. So do I.

As an aside he has built up quite a war chest to buy when the time is right IMHO.

Thoughts?

I have been reading a little about this, but a lot of articles have panic-stoking headlines and some writers have an agenda that is pretty transparent by the angle they take and what information gets buried.

From what I can decipher, the proposed long-term capital gains tax rate increase would be on those with incomes of a million dollars a year. (That's annual income not net worth.) That other thing about unrealized gains looks like it applies to those sitting on a hundred million. But I have yet to find what is being said about us peasants who might want to sell some shares at the usual 15% (or less) rate.

I think a lot of regular people are thinking about this anyway just because the market is so high, but they don't want to sell because of the tax hit. Some, if on the older end and if they have more than they ever will need, might decide to give an early inheritance or donate shares to charity, and not pay any capital gains themselves and get to see the money used. Decisions like this are what my old, favorite accountant used to call trying to free your money from its prison.

Well, I do not make a million a year, and I am sure not sitting on a hundred million, and as far as I can find out, that's who this capital gains tax increase would hit.

Bottom line, it would never get through congress anyway to hit regular investors that hard because that would affect a lot of them, across the aisle, too.

Boomer (not too worried)

[GoRedSox!]

I am going to try to comment on this is the least political way possible, but realistically, future taxes will be impacted by who is elected.

Looking into the future, the biggest financial items for us are:

1. Declining interest income due to falling interest rates;
2. Will the 2017 income tax provisions be extended after they expire in 2025?
3. Will ACA subsidies continue at current income levels after 2025?

I am not really worried about capital gains rates because our annual taxable income is nowhere near the $400,000 threshold and neither candidate is talking about tax increases for folks at this income level.

More significantly, these last few years, we were able to earn significant interest income on savings for the first time in over 15 years. Perhaps I should have tied up cash savings in ten year Treasuries, but I didn’t. Short term yields look like they are about to drop sharply. I am not putting these savings at risk, so there is going to be some lost income due to falling rates. That’s just a fact of life.

Next, the income tax provisions from the 2017 “tax cut” will impact us if they expire. That tax cut significantly increased the standard deduction, while also reducing some of the income tax brackets and eliminating personal exemptions. I have not attempted to figure out how much impact it will have if the tax cuts are not renewed. Neither candidate has talked about increasing taxes for those under $400,000, but Congress must take action to stop those tax cuts from expiring and I am not sure that can be assumed.

The old ACA subsidy income limits were 400% of the federal poverty level and the subsidies fell off the cliff at the first dollar of income over that limit. For a family of two, the limit prior to 2021 had been in the vicinity of $68k of modified adjusted gross income. The law was changed during the pandemic to raise the subsidy income limits to at least the $130’s of MAGI, I’m not sure exactly what the highest limit is but the subsidies phase out instead of dropping off a cliff. Anyway, we can’t get below $68k if those subsidies return to the old levels after 2025. I will go on Medicare late in 2025, but my wife not until 2030. The ACA plans with no subsidies are very expensive.

Everyone’s income and tax situation is different, but we are pretty typical early retirees and so others may be looking at similar situations. There may be other items as well I am forgetting about. Good luck to everyone.

[Stu from NYC]

We are living in interesting times.

Hoping they look at outrageous spending going on.

[CoachKandSportsguy]

Yeah, but it's not a stretch to reduce the threshold from $1M to $400k, and then not inflate it by CPI, and pretty soon high middle class will qualify. . .

Remember, taxes area by product of success, and tax rates are subject to the whims of congress, and populism if there is a large inequality in the socio economic status. . hmmm, things that remind us of the why in the French Revolution

Finally paying taxes is not the best reason to not sell. . .

if the tax rate is 15% and the value of the investment drops by 20 %, you have a lot less cash from the sale, 20% less from the drop and still another 15% from taxes. . . just ask T Boone Pickens. . . he made the decision on one investment to wait from short term to long term gains, and lost most of his profit while waiting. . said it was the stupidest decision evah!

[Rainger99]

Originally Posted by Stu from NYC

Hoping they look at outrageous spending going on.

When is the last time they did that???

It is usually a spending issue rather than a revenue issue.

In 2018 we were spending less than $5 trillion a year. I am old enough to remember that and I don’t recall people starving or that things were that bad.

If we cut spending back to 2018 spending there might be a need to increase tax rates. Increasing rates does not necessarily increase revenue and cutting rates does not necessarily decrease revenue.

U.S. government - Outlays 2029 | Statista

[opinionist]

A significant financial event is on the horizon, and he is not the only insider selling their stock. Some insiders have never sold their stock before. The consequences of fiscal insanity may finally become manifest.

[golfing eagles]

Originally Posted by rainger99

when is the last time they did that???

1774

[Stu from NYC]

Originally Posted by Rainger99

When is the last time they did that???

It is usually a spending issue rather than a revenue issue.

In 2018 we were spending less than $5 trillion a year. I am old enough to remember that and I don’t recall people starving or that things were that bad.

If we cut spending back to 2018 spending there might be a need to increase tax rates. Increasing rates does not necessarily increase revenue and cutting rates does not necessarily decrease revenue.

U.S. government - Outlays 2029 | Statista

If only I could post my thoughts on how to get it under control but think I would get into trouble.

[rustyp]

Originally Posted by Stu from NYC

If only I could post my thoughts on how to get it under control but think I would get into trouble.

I have a plan but if I post it now I will not be able to use it !

[tophcfa]

Originally Posted by opinionist

A significant financial event is on the horizon, and he is not the only insider selling their stock. Some insiders have never sold their stock before. The consequences of fiscal insanity may finally become manifest.

It’s not if, but when, the consequences of fiscal (and monetary) insanity finally manifest themselves. The recent bout of hyper inflation was just a sneak preview.

And now they are ready to slash interest rates to levels below real rates of return yet again, inflating the bubble even more before it eventually bursts.

[DrMack]

Originally Posted by GoRedSox!

Next, the income tax provisions from the 2017 “tax cut” will impact us if they expire. That tax cut significantly increased the standard deduction, while also reducing some of the income tax brackets and eliminating personal exemptions. I have not attempted to figure out how much impact it will have if the tax cuts are not renewed. Neither candidate has talked about increasing taxes for those under $400,000, but Congress must take action to stop those tax cuts from expiring and I am not sure that can be assumed.

This would be the most alarming circumstance brought to the table for this country. You can’t overstate how important it is that the cuts do not expire. If they do, it will be a huge increase on everyone. Further, inflation will skyrocket as corporations raise their prices for their goods to pay for the change.