The post MicroStrategy May Face Tax Issues Over $19 Billion Unrealized Bitcoin Gains: Report appeared on BitcoinEthereumNews.com.

According to a report by The Wall Street Journal, business intelligence firm MicroStrategy may face significant tax liabilities on its unrealized Bitcoin (BTC) gains, valued at $19 billion. MicroStrategy, notably the world’s largest corporate BTC holder, currently holds more than 430,000 BTC on its balance sheet. Unrealized Bitcoin Gains Could Pose Challenges For MicroStrategy As of now, MicroStrategy’s total Bitcoin holdings are worth over $47 billion, with $19 billion in unrealized gains. Over the years, the US-based company has raised funds through stock and debt offerings to finance its BTC purchases. While MicroStrategy has not sold any Bitcoin to date, it may still be required to pay billions in taxes on its holdings due to the Corporate Alternative Minimum Tax (CAMT) provision under the Inflation Reduction Act passed in 2022. Specifically, the CAMT imposes a 15% tax rate based on an adjusted version of a corporation’s earnings. MicroStrategy is the largest corporate holder of BTC | Source: CoinGecko It is important to note that the Internal Revenue Service (IRS) provides exemptions for unrealized gains from securities, such as common stock. However, the IRS has yet to extend such exemptions to unrealized gains on cryptocurrency assets like Bitcoin. Tax analyst Robert Willens commented that the IRS may draft rules that favor MicroStrategy, particularly given Donald Trump’s pro-crypto stance. However, he cautioned that this outcome is not guaranteed. Willens explained: If the Biden group was still in place, they probably wouldn’t get the exemption. It would be easy to slot crypto assets into the same exemption that stocks are going to enjoy, because there’s no real difference in the accounting. Should MicroStrategy be required to pay taxes on its unrealized Bitcoin gains, the company might be forced to sell off a portion of its holdings to raise cash. Such a move could…

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Filed under: News - @ January 25, 2025 10:17 am