WSJ: MicroStrategy May Need to Pay Billions in Unrealized Bitcoin Gains Tax

(MicroStrategy), a self-proclaimed BTC development company, has successfully attracted substantial capital and imitators from other companies with its unique business model. However, according to The Wall Street Journal, MicroStrategy may need to pay federal income tax on its unrealized BTC gains, starting from next year, which could amount to billions of dollars.

MicroStrategy may need to pay billions of dollars in unrealized Bitcoin capital gains tax

In 2022, the Inflation Reduction Act, signed into law by President Biden in August, includes the 'Corporate Alternative Minimum Tax (CAMT)' targeting the minimum tax on the book income of large multinational corporations. The tax rate is 15%, aiming to ensure that these companies pay a certain minimum tax and prevent tax avoidance.

Typically, investment gains are not taxed until the asset is sold. However, under the Inflation Reduction Act, MicroStrategy may be required to pay federal income tax on its unrealized BTC gains, even if it never sold a single BTC. The tax, which could start next year, could total billions of dollars.

According to reports, the Internal Revenue Service (IRS) of the United States has reportedly proposed rules to exempt companies like Berkshire Hathaway from paying taxes on unrealized stock gains. However, for cryptocurrencies such as Bitcoin (BTC) and other encrypted assets, the unrealized