Lower tax rate fuels record profit for Buffett's Berkshire

Darnell Taylor
February 24, 2018

Last month, he gave two top executives Ajit Jain and Gregory Abel greater oversight of Berkshire's operating businesses, cementing their status as the front-runners to succeed Buffett atop the conglomerate.

Warren Buffett, chairman and chief executive, said in Berkshire's annual report that the operating results of Berkshire's business are more important for investors to consider than quarter-to-quarter changes in investment results or one-time events like the tax law change.

New legislation signed last December by President Donald Trump lowered Berkshire's estimate of how much it would have to pay in taxes if it sold the stock investments it now holds.

Berkshire attributed roughly $29.11 billion of its net income to the reduction of the corporate tax rate, to 21 percent from 35 percent, that Trump signed into law in December.

The change raised Berkshire's net income for 2017 to $44.9 billion, or $18.22 per Class B share, from $24.1 billion, or $9.76 per Class B share, in 2016. It might have come in handy for acquisitions, but the company was unable to find one at a suitable purchase price. "Indeed, price nearly seemed relevant to an army of optimistic purchasers", wrote Buffett.

How much Olympic medalists win in prize money by country
Legendary Jamaican sprinter Usain Bolt got more applause than swimmer Katy Ledecky, who won five medals in the pool for Team USA. Meyers Taylor and Kaillie Humphries of Canada are also the only women in the world who have won three Olympic bobsled medals.

But a surge of valuations and profits in companies, coupled with the availability of cheap debt, boosted acquisition activity in 2017, making prospective targets expensive. Equity holdings include Apple, Wells Fargo and Coca-Cola.

Buffett supported Hillary Clinton, a Democrat, in the 2016 USA presidential election.

Here's what to watch for in the latest letter from Buffett, 87, which is set for release online Saturday at 8 a.m.at Berkshire's home page http://www.berkshirehathaway.com/. Naturally, speculation is rife about who will replace him. Berkshire also owns scores of businesses that it has acquired over the years, including auto insurer Geico, ice cream retailer Dairy Queen and BNSF Railway Company.

We've rounded up eight of our favorite quotes from this year's letter. "Both of us believe it is insane to risk what you have and need in order to obtain what you don't need". "And that says it all", he wrote.

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