MicroStrategy faces potential multibillion-dollar tax on unrealized bitcoin gains
Jan. 24, 2025 11:11 AM ET
By: Max Gottlich, SA News Editor
 Marco Bello/Getty Images News
MicroStrategy (NASDAQ: MSTR), one of the largest corporate holders of bitcoin ( BTC-USD), may be subject to a 15% tax on unrealized gains from its $47B bitcoin stash, according to a recent disclosure, which also noted the Michael Saylor-founded company's BTC holdings include $18B of unrealized gains.
The so-called corporate alternative minimum tax on investment gains, introduced by the Inflation Reduction Act of 2022, could potentially tax MicroStrategy (NASDAQ: MSTR) on its unrealized bitcoin ( BTC-USD) gains at a 15% rate, leading MicroStrategy ( MSTR) to a potential multibillion-dollar tax bill starting in 2026, the Jan. 6 filing noted.
The new tax is calculated based on an adjusted version of MicroStrategy's ( MSTR) GAAP earnings, which now must include fair market value of its bitcoin due to new accounting standards set by the Financial Accounting Standards Board. The corporate alternative minimum tax differs from a traditional capital gains tax, which doesn't take effect until the investments are sold.
MSTR estimated an increase in GAAP retained earnings by up to $12.8B and deferred tax liabilities by up to $4.0B, per the SEC filing.
As such, MicroStrategy ( MSTR) is pushing for an Internal Revenue Service exemption similar to those for securities held by companies like Warren Buffett's Berkshire Hathaway ( BRK.A) ( BRK.B), arguing that there is no fundamental difference in accounting for stocks vs. crypto, The Wall Street Journal said. If an exemption is not secured, the company might need to sell some of its bitcoin ( BTC-USD) to pay the tax -- something that Saylor has pledged not to do anytime soon. |
