Reuters ran a story that said the buyback "likely helped" the seller's estate "save substantially on taxes," just one day after Buffett's call for a "strong" estate tax.
And on "
Squawk on the Street
" earlier today, CNBC's Gary Kaminsky accused
Buffett of hypocrisy
for helping a wealthy "friend" avoid taxes.
Buffett pointed out
in an email to CNBC responding to Kaminsky, the assumption the seller was trying to save on taxes is wrong.
Yesterday's news release said Berkshire bought the 9200 Class A shares from "the estate of a long-time shareholder."
Under the long-standing "step-up" provision of tax law, capital gains taxes are not imposed on the increase in an asset's value from the time it was first acquired. Instead, the "cost basis" is the asset's value around the time of the inheritance.
As a result, Buffett wrote us, "the estate did not have a gain regardless of when the stock was sold."
Critics appeared to believe the capital gain would be calculated based on the much-lower price of Berkshire stock when it was first acquired years ago by the still unnamed "long-time" shareholder.
Kaminsky also called the buyback "hypocritical to the highest level" because, he argued, Buffett had said in the past he would "never" buyback Berkshire stock.