MicroStrategy Faces Potential Tax Burden on Unrealized Bitcoin Gains: Report

Last updated:

Journalist

Tanzeel Akhtar

Journalist

Tanzeel Akhtar

About Author

Tanzeel Akhtar has been covering the cryptocurrency and blockchain sector since 2015. She has written for the Wall Street Journal, Bloomberg, CoinDesk, Bitcoin Magazine and Bitcoin.com.

Last updated:

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas – from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

Ad Disclosure

We believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. Read more

MicroStrategy, a business intelligence firm helmed by prominent Bitcoin advocate Michael Saylor, faces potential federal tax liabilities on its extensive Bitcoin holdings, estimated at $47 billion, according to a Wall Street Journal report on Friday.

The company’s massive crypto portfolio, which includes $18 billion in unrealized gains, has drawn attention amid evolving U.S. tax regulations.

MicroStrategy Faces Possible Tax Bill from Bitcoin Holdings

The U.S. Corporate Alternative Minimum Tax (CAMT), introduced under the Inflation Reduction Act, imposes a 15% tax on adjusted GAAP earnings for corporations earning over $1 billion annually.

Notably, this framework includes unrealized gains on assets like Bitcoin, meaning profits from assets that have appreciated in value but remain unsold could still be taxed.

Should the tax be enforced, MicroStrategy may face billions of dollars in liabilities starting in 2026.

To address these potential liabilities, the firm is reportedly negotiating with the Internal Revenue Service (IRS) to seek exemptions.

However, the IRS has yet to indicate whether any relief will be granted under the current tax framework.

MicroStrategy’s substantial Bitcoin accumulation has been a prominent aspect of its business strategy.

The company raised capital through stock and debt offerings to acquire its holdings.

While this approach has drawn attention to Bitcoin, it now poses unique challenges amid increasing regulatory scrutiny.

The outcome of these tax issues may set a precedent for other corporations holding cryptocurrency assets.

MicroStrategy Expands Bitcoin Holdings with $1.1 Billion Purchase

As MicroStrategy deals with potential tax liabilities, the firm continues to expand its Bitcoin portfolio. On January 21, the company added 11,000 BTC to its holdings, equivalent to $1.1 billion.

According to a Tuesday X post from Saylor, this latest acquisition brings the company’s total Bitcoin holdings to 461,000 BTC, valued at approximately $29.3 billion.

The average cost per Bitcoin in its portfolio stands at $63,610.

You might also like

You May Also Like