MicroStrategy Faces Billions in Taxes on Bitcoin Gains, Struggles with New Tax Rules

MicroStrategy ($MSTR) may face billions in federal taxes starting in 2026 due to $18 billion in unrealized Bitcoin gains, as per a WSJ report. This is a result of the Corporate Alternative Minimum Tax (CAMT) introduced under the 2022 Inflation Reduction Act, which targets companies with over $1 billion in annual financial income, calculated using GAAP.

While stock gains are exempt from CAMT, crypto assets like Bitcoin are not, and MicroStrategy is lobbying the IRS to apply the same exemption to Bitcoin gains. The company hopes the crypto-friendly stance of the Trump administration might influence this decision.

If the IRS denies the exemption, MicroStrategy may be forced to sell some of its Bitcoin holdings to cover the tax bill, which could undermine its Bitcoin-centric strategy. The company currently lacks other profitable ventures to support such a large tax liability.

New accounting rules also require Bitcoin to be reported at fair value on financial statements, potentially leading to up to $4 billion in deferred tax liabilities and a $12.8 billion increase in retained earnings, further increasing its financial exposure.

This highlights the challenges that crypto assets face under evolving tax and accounting regulations. Whether the IRS will grant exemptions for crypto remains to be seen.

Source: WSJ

MicroStrategy’s total Bitcoin holdings have grown to 461,000 BTC, with a current value of around $29.3 billion. The average cost per Bitcoin for these holdings has increased to $63,610.