Forbes spells out the tax benefits to Warren Buffett and Berkshire Hathaway of his deal to trade Berkshire's appreciated Procter & Gamble stock for Procter's Duracell battery brand:
Berkshire, according to public documents, is sitting on billions of dollars in capital gains on its Procter & Gamble holding, which stretches many years. By paying for Duracell with Berkshire's 1.9% holding of Procter & Gamble's stock, Buffett is likely to minimize his capital gains bill significantly.
According to Berkshire's most recent annual letter, Berkshire acquired its current 1.9% stake in P&G at a price of $336 million. As of November, Berkshire's 52.5 million share stake is worth around $4.7 billion, meaning Buffett's investing portfolio is sitting on billions in capital gains, which are taxed at a 38% rate when accounting for federal and state taxes.
However, by transferring $4.7 billion in stock back to P&G, Berkshire will likely avoid those capital gains taxes.
This is classic Buffett. When he isn't writing New York Times op-ed pieces calling for higher taxes on other people and claiming that investors who turn down opportunities because of taxes exist "only in Grover Norquist's imagination," he's running around figuring out how to save himself and his shareholders taxes by operating in a highly tax efficient manner and designing deals that are attractive in part because of their tax savings.