That seems like an ungenerous interpretation of the parent's comment. I didn't take that comment to mean that GAAP is not a good way to calculate income tax, but that it's not a good way to judge the true financial prospects of a company.

Easy: they only realize taxable gains when the startups have a liquidity event -- ie go public or get acquired. (Or die, for the losses.)

I'm not totally up on this but in the most recent Berkshire letter Buffett was saying they changed that for listed investments but not unlisted.

My comment in relation to the comment that stated GAAP earnings are more sane. I think using GAAP as a standard for valuing an investment fund is a little asinine. Unrealized losses/gains yes, but GAAP doesn’t save you from mark to market. There’s a reason PE returns are smoother than public equities. Public PE firms wrote down assets way less than the decline in public equities in Q4. My problem with the new GAAP rules is that it distorts operating earnings and investment earnings. For example, when Stripe goes public, Amex will have fluctuating security in its earnings statement, or Booking and Ctrip, etc.