Expert: Dr. Joseph de Beauchamp - 7/1/2006

Question

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Followup To

Question -
Warren Buffitt is giveing away 10 million shares of Berkshire-Hathaway B.  Since this stock does not pay a dividend how will it help Gates' charity?  Must it be sold to be of value to them? If they do sell it, will this affect the value of the stock?
Thank you,
Daniel, AZ

Answer -
Daniel,

He gave away 34 billion dollar in stock. It can be liquified by a simple loan on the stock. This could be done with any bank or broker dealer. There would be no estate taxes or income taxes.

Dr. Joseph de Beauchamp

Doctor thank you for your prompt reply. A followup please.  Would the price per share of tne remaining publically-held stock be reduced if such a loan was executed?  Also how would they repay the loan-would it be by selling more stock?

Answer
No, the loan does not impact the stock price. Use the metaphor of a loan on a house, and this works the same way. The loan is open ended, meaning that the loan could be repaid at anytime. There is not a schedule for margin loans on stocks.

Dr. Joseph deBeauchamp