MicroStrategy Under Tax Threat? IRS Rules Put Pressure on Its 460K Bitcoins

• MicroStrategy commands 461,000 BTC worth $48.65 billion and could owe up to $2.9 billion in federal taxes.
• MicroStrategy intends to raise $42 billion through equity and convertible note offerings.
• The firm’s stock took a 1.11% decline over the past 24 hours.

The world’s largest corporate holder of Bitcoin (BTC), MicroStrategy, may be facing a gigantic tax bill on its unrealized BTC gains which today stand at $19.35 billion.

If enforced, the firm may owe billions in taxes and place significant selling pressure on its 461,000 BTC holdings.

MicroStrategy’s Federal Taxes

Michael Saylor’s ambitious Bitcoin investment strategy may have yielded gigantic profits and a sizeable tax bill. As per a report from the Wall Street Journal, the firm might need to pay federal income taxes on its unrealized BTC profits under the 2022 Inflation Reduction Act (IRA ).

Reportedly, the firm may need to pay taxes on its near-$20 billion in unrealized gains. In this instance, it may qualify for a 15% capital gains tax rate, meaning MicroStrategy could owe around $2.9 billion in federal taxes.

This seems unlikely, as so far, the idea of taxing unrealized gains seems to be just a proposal tabled by the U.S. government under Joe Biden. It does not seem to be in effect.

Trump issued an executive order to place a 90-day hiring freeze on all federal agencies, bar the Internal Revenue Service (IRS), which will remain frozen until Donald Trump’s administration deems it a “national interest” to hire again.

Saylor may be able to seek refuge under Trump’s pro-crypto umbrella or capitalize on the IRS hiring freeze during U.S. tax season, as some view the order as a reduction of enforcement on the rich.

Stocks and Shares

The firm may have seen this coming as, most recently, MicroStrategy shareholders approved increasing its authorized Class A shares from 330 million to a whopping 10.3 billion, a 30x jump.

Shareholders also opted to increase preferred stock shares from 5 million to 1 billion. It comes as part of the firm’s wildly ambitious aims to raise $42 billion by 2027 through equity and convertible note offerings.

The company’s stock, MSTR, was riding high ahead of Trump’s inauguration, however, it has since experienced significant volatility in the days following. Seemingly, investors were displeased with this latest revelation, resulting in a 1.11% drop in the stock’s price over the past 24 hours.