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Micro-strategy may face the risk of billions of dollars in Bitcoin unrealized income tax
The main business is in losses, and micro-strategy may need to sell Bitcoin and pay taxes?
Home web3.0 Micro-strategy may require billions of dollars in Bitcoin unrealized income tax

Micro-strategy may require billions of dollars in Bitcoin unrealized income tax

Mar 05, 2025 pm 05:30 PM
DingTalk Bitcoin cryptocurrency

Micro-strategy may require billions of dollars in Bitcoin unrealized income tax

The micro-strategy company with Bitcoin as its core business has its unique business model that has enabled it to obtain huge capital and has triggered other companies to follow suit. However, according to the Wall Street Journal, micro-strategy may face huge federal income taxes due to its unrealized gains in Bitcoin, which may be collected from next year and may total up to billions of dollars.

Micro-strategy may face the risk of billions of dollars in Bitcoin unrealized income tax

In August 2022, the Inflation Cuts Act signed by President Biden includes a "company alternative minimum tax" (CAMT) for large multinational corporations at a tax rate of 15%. The bill aims to prevent large businesses from evading taxes and ensure they pay the minimum tax.

Generally speaking, investment income must be taxed after the asset is sold. But under the Inflation Cuts Act, micro-strategies may require federal income tax on their Bitcoin unrealized gains, even if the company does not sell Bitcoin. The tax could be collected from next year and could total billions of dollars.

The report pointed out that the IRS has provided exemptions to companies such as Berkshire Hathaway in the proposed rules so that it does not have to pay taxes on unrealized stock gains. However, the IRS has not yet provided a similar exemption for unrealized gains in crypto assets such as Bitcoin.

Micro Strategy is currently communicating with the IRS to strive for exemptions. Tax analyst Robert Willens said the IRS may exempt cryptocurrency from unrealized gains, but that is not a surefire.

The main business is in losses, and micro-strategy may need to sell Bitcoin and pay taxes?

If the micro-strategy ultimately needs to pay taxes on unrealized bitcoin gains, the company may need to sell some of the bitcoin to raise funds, as its software business is not currently profitable. This will undermine its long-term Bitcoin holding strategy and make it one of the least efficient ways to invest in Bitcoin.

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