Subject: Re: Kraft Heinz math
I think this might be mixing some things up.

It should be noted that the dividends that Berkshire received were not taxed at Berkshire, so that $6.3b is net. (Unless I have misunderstood equity method accounting yet again, which is certainly possible)

Equity method accounting relates to GAAP financial statements. Dividends received (in terms of cash flows) from the investee would generally be taxable to Berkshire, reduced by the Dividends Received Deduction.

All of Berkshire's share of KHC's net earnings after tax are reported in net income at Berkshire's level, and Berkshire's tax liability does not change whether the investee's dividend payout ratio is 0% or 100%. The dividend money coming in the door is booked as return of capital, and (for less than obvious reasons) each dividend reduces the book value of the stake.

This is true that the share of KHC income (net of tax) is reported on Berkshire's Income Statement. But it should be the case that the share of earnings creates a deferred tax liability when those are undistributed, and then an actual tax liability when those earnings are distributed (i.e., paid from KHC to Berkshire).

The reason that the dividend reduces the book value of the stake is pretty easy to understand. The investment account basically acts like a savings account that Berkshire controls: it increases when the underlying "account" (i.e., KHC's operations) earns money, and it decreases when the owner withdraws money from that account (i.e., Berkshire gets dividends from KHC). So the investment balance doesn't decrease each period as dividends are paid; it actually increases each period by Berkshire's proportionate share of undistributed income. You can see from Note 5 that Berkshire's carrying value increased from $12,937 in 2022 to $13,395 (millions) in 2024.