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Berkshire hathaway Employees: Strategic Ways to Reduce Capital Gains on Appreciated Stock

Healthcare Provider Update: Healthcare Provider for Berkshire Hathaway: UnitedHealth Group Blog Post Paragraph on Potential Healthcare Cost Increases in 2026: As we look toward 2026, Berkshire Hathaway employees and many others in the United States may face significant challenges with healthcare costs. Current projections indicate that average premiums for Affordable Care Act (ACA) marketplace plans could rise sharply, with some states experiencing increases of over 60%. This surge is largely attributed to the possible expiration of enhanced federal subsidies, alongside escalating medical costs driven by factors such as expensive medications and hospital services. Experts warn that without renewed subsidies, millions of consumers could see their premiums more than double, putting healthcare access at risk for a substantial portion of the population. Consequently, proactive steps to manage these anticipated rises, such as optimizing health plan selections and maximizing health savings accounts, will be essential for both employees and employers alike. Click here to learn more

'Berkshire hathaway employees can benefit from understanding that strategies like a Section 351 exchange, charitable donations, and tax loss harvesting may work together to help manage appreciated stock efficiently while aligning with broader long-term financial goals.' – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.

'Berkshire hathaway employees should recognize that thoughtful planning with tools such as Section 351 exchanges, gifting strategies, and tax loss harvesting can help them manage highly appreciated stock while supporting both personal and philanthropic objectives.' – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article we will discuss:

How a Section 351 exchange can defer capital gains on highly appreciated stock.
Alternative tax-efficient strategies such as charitable donations, tax loss harvesting, and gifting.
The role of inheritance rules, step-up in basis, and combined approaches in long-term tax planning.

A Tax-Aware Q&A on How to Manage Highly Appreciated Stock

From the Section 351 exchange to other practical approaches, this Q&A addresses key considerations Berkshire hathaway employees may encounter when dealing with highly appreciated shares.

Section 351 Exchange: The Fundamental Approach

Q: What is an exchange under Section 351?
A: Under certain circumstances, an investor may transfer property, such as highly appreciated shares, to a company in exchange for its stock under a provision of the Internal Revenue Code that allows the deferral of capital gains or losses.

Q: What is the primary advantage of exchanging my appreciated stock through a Section 351 exchange?
A: The main advantage is tax deferral. Gains transferred to corporations may be postponed under Section 351, though this applies only if specific diversification requirements are met, especially when transferring to investment companies like exchange-traded funds (ETFs). ¹

Q: What is meant by the “Control Test”?
A: The investor or group of investors who use their portfolio assets to fund the new entity must own at least 80% of the voting power and 80% of the total number of shares of all other classes of stock in the new company immediately after the exchange. ¹

Q: When seeding an ETF, how is the Control Test usually satisfied?
A: It is typically satisfied by either a single substantial investor making a significant asset contribution or multiple investors pooling assets to create a seeding pool for the ETF’s launch.

Q: What is the ultimate tax payment date for the deferred gain?
A: The deferred gain is recognized when the ETF shares acquired through the exchange are sold; distributions from taxable funds must also be reported in the meantime.

Other Tax-Efficient Techniques

Q: What is a straightforward method, aside from a Section 351 exchange, to sell highly appreciated shares without incurring large taxes?
A: Donating shares directly to a qualified charity is one option that some Berkshire hathaway employees may benefit from.

Q: What tax advantages come with donating valuable stock to a charity?
A: Subject to holding period and adjusted gross income (AGI) limits, you can bypass capital gains taxes on the appreciation and may receive an income tax deduction for the stock’s full fair market value.

Q: What is a Donor-Advised Fund (DAF)?
A: A DAF allows you to donate appreciated stock, receive an immediate tax deduction, and then recommend grants to charities over time, while the assets in the DAF grow without tax impact. ²

Q: Can I give a family member my appreciated stock as a gift?
A: Yes. In most cases, the cost basis from the donor carries over to the recipient.

Q: Why would I give a family member in a lower tax bracket appreciated stock?
A: If they sell the stock, the lower income could result in a reduced capital gains rate, potentially as low as 0% for long-term gains. ³

Tax Loss Harvesting and Other Approaches

Q: What is harvesting tax losses?
A: Selling investments at a loss to offset gains from other sales is known as tax loss harvesting, a strategy sometimes considered by Berkshire hathaway employees seeking opportunities to leverage bouts of market volatility.

Q: Can I deduct a certain amount of loss from my regular income?
A: Yes. If your capital losses exceed your gains, you can use up to $3,000 per year ($1,500 if married filing separately) to offset ordinary income, with remaining losses carried forward indefinitely. ⁴

Q: What is a Qualified Opportunity Fund (QOF)?
A: A QOF provides investors with tax incentives for investing in tracts of land designated as 'opportunity zones'. Capital gains reinvested in a QOF within 180 days of being realized can be temporarily tax deferred, while QOF investments helpd for at least 10 years may confer a permanent capital gains exclusion. ⁵ That said, 2025 legislation changes may prompt IRS updates to this rule.

Inheritance and Step-Up in Basis

Q: What is meant by a “step-up in basis”?
A: This adjusts an inherited asset’s cost basis to its fair market value at the time of the owner’s death, eliminating capital gains accumulated during their lifetime. ⁶

Q: If I gift shares while living, will I receive a step-up in basis?
A: No. The original cost basis transfers to the recipient without adjustment.

Determining the Right Strategy

Q: What is the best course of action for me?
A: The most suitable approach will depend on factors such as your gain size, income level, charitable intentions, and liquidity needs.

Q: Do any of these strategies call for professional guidance?
A: Yes. Given the complexity of the tax code, working with a qualified financial advisor and tax professional is strongly recommended before implementing these strategies.

Q: Is it possible to combine these strategies?
A: Yes. For example, you might execute a Section 351 exchange on part of your portfolio for tax-deferred rebalancing while donating another portion to a DAF for an immediate deduction.

Q: Is there a loophole in the Section 351 exchange?
A: No. This is a legitimate tax code provision designed for corporate restructuring and adapted for use in the ETF market. It is intended for tax deferral, not permanent tax elimination.

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Articles you may find interesting:

Sources:

1. Kitces. ' Using Section 351 Exchanges to Tax-Efficiently Reallocate Portfolios With Embedded Gains ,' by Ben Henry-Moreland and Brent Sullivan. 12 Mar. 2025.

2. Kiplinger. “ A Donor-Advised Fund Can Give Your Charitable Giving a Boost ,” by Samuel Gaeta. 9 May 2024.

3. Internal Revenue Service. “ Topic No. 409, Capital Gains and Losses .” IRS.gov , 8 July 2025.

4. Wealth Enhancement. ' 6 Essential Tax-Loss Harvesting Tips ,' by Jim Wiley. 6 April 2022.

5. Congressional Research Service. ' Tax Incentives for Opportunity Zones ,' by Donald Marples. 26 Apr. 2022.

6. Investopedia. “ Carryover Basis: What It Is, How It Works, Gift Taxes ,” by Julia Kagan. 16 Jan. 2023.

How does the merger of the Johns Manville Employees Retirement Plan into the Berkshire Hathaway Consolidated Pension Plan specifically affect the retirement benefits for current employees at Johns Manville? In what ways can eligible employees of Johns Manville leverage the benefits of this merger to maximize their retirement planning?

Impact of Merger on Current Employees' Retirement Benefits: The merger of the Johns Manville Employees Retirement Plan into the Berkshire Hathaway Consolidated Pension Plan does not decrease the pension benefits previously earned by employees under their prior plans. Employees continue to receive the same benefits with the same payment options as provided by their prior plan. Any previous payment elections, beneficiary designations, and qualified domestic relations orders remain effective. This consolidation also maintains the insurance of pension benefits through the federal Pension Benefit Guaranty Corporation.

What are the implications for employees of Johns Manville if they choose to retire early prior to their Normal Retirement Age? How do the specific conditions set forth in the Berkshire Hathaway Consolidated Pension Plan guide early retirees from Johns Manville in making informed decisions regarding their benefit options?

Implications of Early Retirement: Employees of Johns Manville who choose to retire early, before their Normal Retirement Age, can still receive benefits. However, these benefits are adjusted based on the age of retirement. If an employee retires at 60, for instance, their monthly benefit payment from the plan will be reduced by a certain percentage for each month that the benefit payments start before the Normal Retirement Age. This reduction compensates for the longer period over which benefits are expected to be paid.

Given the unique characteristics of the Merged Plan, what should employees at Johns Manville consider when calculating their Average Final Salary, and how does this calculation impact their retirement benefits? Additionally, how is Covered Compensation factored into this adjustment, and what strategies can employees employ to ensure accurate calculations?

Calculation of Average Final Salary and Covered Compensation: When calculating the Average Final Salary for retirement benefits, it includes the highest-paid, five consecutive years out of the last ten years of employment. This calculation impacts the retirement benefits as it forms part of the formula used to determine the pension amount. Additionally, Covered Compensation, which refers to the average of the Social Security wage bases, is used to adjust portions of the salary in the benefits calculation, ensuring that the benefits align with national wage growth trends.

How can employees of Johns Manville navigate the various options available for retirement benefit payments outlined in the Berkshire Hathaway Consolidated Pension Plan? What key points should Johns Manville employees consider regarding the selection of forms of payment and potential tax implications in retirement?

Navigating Retirement Benefit Payment Options: Employees of Johns Manville need to consider the form of payment for their retirement benefits, as different options can have different tax implications and affect monthly income. Options typically include lump sums, annuities, or a combination. Employees should consider their financial needs, tax situation, and life expectancy when choosing the form of payment. Consulting with a financial advisor could be beneficial.

For employees at Johns Manville, what steps should they take to stay informed about their accumulated service and benefit service credits, particularly in relation to the changes brought about by the merger into the Berkshire Hathaway Consolidated Pension Plan? How do vested rights impact their eligibility for retirement benefits?

Staying Informed About Service Credits: To manage the transition and keep track of their service credits post-merger, Johns Manville employees should regularly review their service and benefit statements, maintain communication with the plan administrator, and attend any informational meetings or seminars offered by Berkshire Hathaway. Understanding how service credits are calculated and tracked ensures that employees can accurately plan for retirement.

What is the process for reemployment under the Terms of the Merged Plan for former employees of Johns Manville, and how can they ensure their accumulated benefit service is credited effectively upon rehire? What are the implications of this reemployment on their retirement benefits, particularly concerning their previous employment history?

Reemployment and Accumulated Benefits: Reemployed former employees of Johns Manville should verify how their accumulated benefits are treated upon their rehire. Generally, benefits accumulated during previous periods of employment will be credited upon rehire, but specific plan provisions should be consulted to confirm how reemployment affects accrued benefits and eligibility for additional benefits.

What do the terms of the Berkshire Hathaway Consolidated Pension Plan dictate regarding disability retirement benefits for eligible employees at Johns Manville? How should employees approach the application process for disability benefits, and what criteria do they need to be aware of to qualify?

Disability Retirement Benefits: Eligible employees of Johns Manville who become disabled according to the terms of the plan may qualify for disability retirement benefits. The process involves a determination by the plan administrator, and employees must meet specific criteria outlined in the plan documents to qualify. Understanding these criteria and the required documentation is crucial for accessing disability benefits.

How can employees of Johns Manville ensure they have adequate protection for their beneficiaries under the retirement provisions outlined in the Berkshire Hathaway Consolidated Pension Plan? What specific steps can employees take to secure these benefits, and how can they keep their beneficiary designations updated?

Beneficiary Protections: Employees should regularly review and update their beneficiary designations to ensure that their retirement benefits are distributed according to their wishes upon their death. This includes making any necessary changes following life events such as marriage, divorce, or the birth of a child.

How does participation in the Merged Plan differ for salaried and hourly employees of Johns Manville, and what specific eligibility criteria apply to each group? How can understanding these differences improve retirement planning for employees across the different classifications?

Differences in Participation for Salaried and Hourly Employees: The eligibility and benefits might differ between salaried and hourly employees under the Merged Plan. Understanding these differences helps employees make informed decisions about their retirement planning and benefit utilization.

How can employees of Johns Manville contact the Local Benefits Administrator for assistance regarding their retirement benefits and the contents of their plan documents? What are the recommended methods of communication for inquiries or requests regarding their Merged Plan benefits?

Contacting Local Benefits Administrator: Employees should contact their Local Benefits Administrator for any inquiries or assistance regarding their retirement plan. Keeping the contact information updated and consulting the administrator for guidance on plan provisions and benefit claims is advised for navigating their retirement benefits effectively.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Berkshire Hathaway offers both a traditional defined benefit pension plan and a defined contribution 401(k) plan. The defined benefit plan provides retirement income based on years of service and final average pay. The 401(k) plan features company matching contributions and various investment options, including target-date funds and mutual funds. Berkshire Hathaway provides financial planning resources and tools to help employees manage their retirement savings.

Berkshire Hathaway has agreed to a $10 million settlement in a long-running pension dispute involving Acme Brick. The company continues to offer comprehensive retirement benefits, including a defined benefit pension plan and a 401(k) plan. In today's political climate, it is important to stay informed about these benefits.

Berkshire Hathaway does not typically offer RSUs or stock options as part of its employee compensation packages, focusing on other forms of financial incentives and benefits.