MicroStrategy may face federal income tax obligations on its significant unrealized gains, which currently exceed $19.3 billion. The company, led by CEO Michael Saylor, holds over 450,000 BTC, valued at more than $48 billion, following recent acquisitions that included a purchase of $243 million worth of Bitcoin at prices below $96,000 each.

The tax implications stem from the 2022 Inflation Reduction Act, which introduced a "corporate alternative minimum tax." Under this provision, MicroStrategy could be subjected to a 15% tax rate based on an adjusted version of its earnings.

The Wall Street Journal reported on Jan. 24, 2025, that this could result in substantial tax liabilities for the company despite its not having sold any Bitcoin to realize profits.

In addition to these potential tax issues, MicroStrategy has a history of legal challenges. The company settled a tax fraud lawsuit for $40 million in June 2024, after being accused by the District of Columbia of failing to pay income taxes during the decade that Saylor resided there.

While the Internal Revenue Service (IRS) is currently reviewing tax regulations, there are discussions about potential exemptions for Bitcoin, particularly under a more crypto-friendly administration.

The outcome of these deliberations could significantly impact MicroStrategy's tax responsibilities moving forward.