MicroStrategy (NASDAQ:MSTR) could be facing a multibillion-dollar tax bill after a recent disclosure revealed that the company's $47 billion Bitcoin holdings include $18 billion in unrealized gains. Under the corporate alternative minimum tax (CAMT), introduced in the Inflation Reduction Act of 2022, MicroStrategy may be taxed 15% on those gains starting in 2026.
Unlike traditional capital gains taxes, which only apply when assets are sold, the new rule requires companies to account for fair market value of certain holdings in their GAAP earnings, including Bitcoin under new Financial Accounting Standards Board (FASB) regulations. As a result, MicroStrategy estimated GAAP retained earnings could rise by up to $12.8 billion, while deferred tax liabilities could increase by up to $4 billion, according to its SEC filing.
To avoid the tax, MicroStrategy is lobbying the IRS for an exemption, similar to what firms like Berkshire Hathaway (BRK.A, BRK.B) receive for their securities holdings. If denied, the company may need to sell some Bitcoin to cover the tax bill, despite CEO Michael Saylor's pledge not to sell anytime soon.
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