MicroStrategy looks set to pay billions in taxes on unrealized gains on its Bitcoin holdings.
The Michael Saylor-led business intelligence firm MicroStrategy has enjoyed significant success in the past year thanks to its bold Bitcoin treasury strategy, but its playbook could come at a hefty cost.
MicroStrategy Stares Down Huge Tax Bill
MicroStrategy may be set to pay billions in taxes on unrealized gains on its Bitcoin holdings.
On Friday, January 24, The Wall Street Journal reported that the business intelligence firm could be forced to pay billions in taxes on $19 billion in unrealized gains from its 461,000 Bitcoin holdings worth over $48 billion starting next year despite having not sold any coins.
The looming tax bill follows a “corporate alternative minimum tax” introduced with the Inflation Reduction Act of 2022 targeted at companies reporting high earnings with minimal taxable income. Under the rule, MicroStrategy faces a 15% minimum tax rate on adjusted earnings, a bill that could force it to liquidate some of its Bitcoin holdings for cash.
Still, MicroStrategy may be able to avoid this tax bill if it secures an exemption from the Internal Revenue Service.
Indeed, the IRS has already granted such an exemption to companies with unrealized gains from stock holdings, and there may be hope of such an exemption for firms holding crypto under the pro-crypto Donald Trump administration.
In a January 2 letter, MicroStrategy pushed for this exemption and described the tax rule’s effect on its business as unjust.
Interestingly, despite being aware of this looming tax bill, MicroStrategy has shown no signs of slowing or pausing its Bitcoin acquisition strategy.
Just on Tuesday, January 21, the firm disclosed an 11,000 BTC buy worth an estimated $1.1 billion. In 2025 alone, the firm has already acquired 14,600 BTC worth over $1.44 billion as new purchases are announced almost every week.
Meanwhile, this is the second time MicroStrategy has faced tax problems in recent years. In June 2024, it paid $40 million to settle tax fraud allegations.
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