MicroStrategy might owe billions in taxes on unrealized Bitcoin gains due to new CAMT rules, risking its long-term hodl strategy.
MicroStrategy’s Bitcoin obsession might backfire big time, thanks to new tax rules under the 2022 Inflation Reduction Act. The Corporate Alternative Minimum Tax (CAMT) slaps a 15% tax on financial income, even if no Bitcoin is sold. Since the company’s Bitcoin stash is worth over $18 billion, their tax bill could hit $4 billion if the IRS doesn’t cut them some slack.
Here’s the deal: unlike regular Bitcoin hodlers who only pay taxes when they sell, MicroStrategy could be taxed on paper profits. While the IRS excludes unrealized stock gains from CAMT, they haven’t done the same for Bitcoin yet. MicroStrategy’s pushing for Bitcoin to be treated like stocks, but it’s a toss-up whether the IRS will budge.
Making it worse, new accounting rules mean MicroStrategy has to report Bitcoin’s market value, which pumps up earnings—and taxes. If they can’t get an exemption, they might have to sell Bitcoin, which totally kills their hodl-and-chill vibe.
Still, with IRS rules up in the air, MicroStrategy is stuck waiting. The Bitcoin tax saga shows just how dicey it can be to pay taxes on super-volatile assets. One wrong move, and the company’s future could be shaky.
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