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Author: Ryan68 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35272  
Subject: Re: Another alternative Date: 8/15/2000 11:01 AM
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The reason for this is that dividends are 70% excluded from corporate income taxes. So to an insurance company, bank, or any other company, preferred stock, which pays dividends and not interest, is priced much like a municipal bond would be to an individual.

This in no way changes the point of your posts, which were excellent. But for insurance companies the exclusion is 59.5%.

I get this from Berkshire's 1999 Annual Report:

Indeed, the 70% rate applies to most corporations and also applies to Berkshire in cases where we hold stocks in non-insurance subsidiaries. However, almost all of our equity investments are owned by our insurance companies, and in that case the exclusion is 59.5%


Just FYI

Ryan

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