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For example they own gieco. Say gieco makes a profit. Gieco pays a corporate tax on that profit. Then they send the money to the parent company, brk. Brk now pays corporate tax (and dividend tax?) on that same money?
Earlier quoted context omitted.
In the case of mutual funds, the individual investors are all subject to capital gains (or losses) whenever the fund sells any shares. Even if the investor hasn’t divested any money from the fund. This loophole now results in investors only being subject to taxation when they actually sell their stake in the fund. IE the same way as how ETFs are designed to work. Alternatives result in double taxation, which means it…
> This loophole now results in investors only being subject to taxation when they actually sell their stake in the fund. IE the same way as how ETFs are designed to work. Your phrasing is slightly misleading. The only reason under tax law that EFTs are taxed this way is because EFTs have always used this same tax dodge. So it's not as if Vanguard has patented (and used) a legal loophole for getting EFT tax treatment…
> My only complaint is that Vanguard has patented this method, so nobody else can immunize a mutual fund from taxes by bolting on an ETF What the...? How is that possible, patenting a tax loophole ?!
It appears they are using an algorithmic process to perform the heartbeat trading, and they are patentable[0] as long as they are not illegal. Tax loopholes are not illegal but very unethical, I think the policy makers share equal if not more blame for this. [0] https://www.quora.com/Is-it-possible-to-patent-an-algorithm