YEREVAN (CoinChapter.com) — MicroStrategy, led by Michael Saylor, may face federal tax obligations on its $19.3 billion unrealized Bitcoin gains. Despite not selling its Bitcoin holdings, the company could qualify for taxation under the Inflation Reduction Act of 2022. This legislation introduced a corporate alternative minimum tax (CAMT), which imposes a 15% tax on adjusted corporate earnings.
A Wall Street Journal report on January 24 stated that companies with adjusted financial statement income (AFSI) exceeding $1 billion on average over three years fall under CAMT. MicroStrategy’s significant Bitcoin holdings place it well above this threshold, potentially subjecting it to additional taxes.
MicroStrategy Headquarters. Source: Wall Street JournalMicroStrategy owns over 450,000 BTC, valued at more than $48 billion, after purchasing $243 million worth of Bitcoin on Jan. 13. Its Bitcoin portfolio tracker highlights unrealized gains exceeding $19.3 billion.
MicroStrategy Bitcoin portfolio, unrealized gains. Source: SaylortrackerLegal Challenges Add to Tax Issues
In June 2024, MicroStrategy agreed to pay $40 million to settle a tax fraud lawsuit. The lawsuit, filed by the District of Columbia’s attorney general in August 2022, alleged that Michael Saylor had avoided paying income taxes in the district for more than a decade while living there.
The lawsuit accused both Saylor and MicroStrategy of tax evasion. This settlement came at a time when regulatory scrutiny of corporate cryptocurrency holdings intensified under CAMT.
Joint Pushback Against CAMT by MicroStrategy and Coinbase
MicroStrategy and cryptocurrency exchange Coinbase have opposed the application of CAMT to unrealized cryptocurrency gains. In a joint letter to the U.S. Treasury and IRS on Jan. 3, the companies requested adjustments to exclude unrealized crypto gains from AFSI calculations.
Coinbase and MicroStrategy CAMT Letter. Source: Federal RegisterThe letter highlighted how CAMT, combined with new accounting standards, forces companies to pay taxes on assets that have not been sold. The companies stated:
“The unforeseen combination of CAMT and a newly promulgated accounting standard are creating unjust and unintended tax consequences.”
The companies expressed concerns about the financial impact of taxing unrealized gains on corporations holding large amounts of cryptocurrency.
Expanded Cryptocurrency Tax Rules Begin in 2025
In June 2024, the IRS issued new cryptocurrency tax regulations, requiring centralized exchanges to report cryptocurrency sales and exchanges starting in 2025. These rules aim to improve compliance by ensuring accurate tax reporting for cryptocurrency transactions.
IRS Crypto Reporting Rules 2024. Source: U.S. TreasuryCentralized exchanges and brokers will need to disclose transaction data to assist taxpayers in filing accurate returns. However, blockchain expert Anndy Lian noted that these regulations could push investors to decentralized platforms, potentially complicating tax collection efforts.
Moreover, in December 2024, the Blockchain Association filed a lawsuit challenging the IRS’s inclusion of decentralized platforms under the term “broker.” The lawsuit argued that such requirements were unconstitutional, especially in the context of decentralized exchanges.
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