- Strategy Chair Michael Saylor revealed that their company may not be subject to the 15% CAMT due to their unrealized gains mostly concentrated on Bitcoin holdings.
Michael Saylor, Executive Chairman of Strategy (formerly MicroStrategy), stated that their company does not expect to be covered by the Corporate Alternative Minimum Tax (CAMT). This is due to the company’s unrealized gains mostly concentrated on its Bitcoin (BTC) holdings.
In its Form 8-K filing with the US Securities and Exchange Commission (SEC), the Bitcoin development company reiterated the provision of the Department of Treasury and Internal Revenue Service’s (IRS) new interim guidance in justifying that a corporation may disregard unrealized gains and losses on its digital asset holdings when computing adjusted financial statement income (AFSI) for purposes of determining whether it is subject to the 15% CAMT under the Inflation Reduction Act of 2022 (IRA). This effectively frees Strategy from the tax burden on its digital asset portfolio.
Strategy’s Unrealized Gains in Bitcoin
As of its latest Bitcoin purchase announcement on Monday, Strategy maintains 640,031 BTC in its treasury. It came from a total investment of $47.35 billion at an average of $73,983 per BTC.
At Bitcoin’s current $117,000 rate, Strategy has elevated its unrealized gains to over $27 billion. Hence, under the new interim guidance and considering the company’s steady accumulation, it would have been due for billions of dollars of corporate tax on its BTC holdings alone by the next tax filing.
IRS and Treasury’s Interim Guidance
Citing an official release from the Treasury and IRS in September 2024, the agencies announced plans to withdraw and repropose CAMT regulations on partnership investments, but also issued new interim guidance related to unrealized gains on digital assets. The new guidance, which was also the subject of a subsequent Form 8-K filing by Strategy, provides clarity for the company.
Specifically, the updated guidance clarifies that corporations can disregard unrealized gains and losses from digital assets when calculating their AFSI for CAMT purposes. This is a significant development because, as of January 2025, a new accounting standard (FASB’s ASU 2023-08) requires companies to report digital assets at fair value on their balance sheets, with changes in value flowing through to net income.
Without this new interim guidance, Strategy would have seen its massive unrealized gains from Bitcoin directly inflate its AFSI, pushing it well over the $1 billion threshold and subjecting it to the 15% minimum tax.
Many see the situation as a strong validation of Strategy’s strong “HODL” strategy in Bitcoin, and a masterclass move from Saylor’s team.
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