Warren Buffett's Apple Dilemma: Redditor Says 'If He Sold, The IRS Would Take A Huge Chunk'

In a recent analysis on r/stocks, user ConstantOne5578 delves into Warren Buffett‘s steadfast stance on Apple Inc AAPL and highlights potential risks amid recent market fluctuations and strategic shifts.

Despite rumors of Buffett considering divestment of Apple stock, due to perceived risks from the EU, DOJ, and China, the user emphasizes Buffett’s track record and long-term investment strategy, rooted in meticulous due diligence.

The Taxing Question

Warren Buffett’s substantial capital gains in Apple, constituting over 80% of Berkshire’s investment, present a significant tax hurdle, further solidifying his commitment to the tech giant, notes ConstantOne5578.

“He can’t sell because a very high percentage of his capital tied down in Apple consists of embedded capital gains, over 80% at present market prices, meaning that if he sold, the IRS would take a huge chunk of Berkshire’s capital in taxes.”

However, emerging concerns loom over Apple’s strategy, including plans to introduce ads on TV+ and AI-driven ads on the App Store, potentially challenging its privacy-focused narrative. Moreover, uncertainties surrounding Google’s antitrust case and regulatory pressures in the EU pose additional risks, necessitating innovative solutions from Apple to mitigate potential losses and retain investor confidence.

Buffett’s Investment Rationale

Responses from stickman07738 and GuitarHero52 shed light on Buffett’s investment rationale, emphasizing the importance of returns via dividends, share buybacks, and stock appreciation in his decision-making process.