MSTR Stock Surges After New Tax Guidance for Bitcoin Holdings

MIAMI BEACH, Florida — Shares of Strategy, the company previously known as MicroStrategy, rose by as much as 6.5% in midday trading on Wednesday after it announced that recent changes in tax regulations would exempt its unrealized Bitcoin gains from the Corporate Alternative Minimum Tax (CAMT).

The news came after the company disclosed in a filing with the Securities and Exchange Commission (SEC) that the Department of Treasury and the Internal Revenue Service had issued interim guidance allowing companies to disregard unrealized gains and losses when calculating their adjusted financial statement income (AFSI) for the tax. This clarification was significant as it affects whether companies meet the threshold for the 15% CAMT established by the Inflation Reduction Act of 2022.

Strategy CEO Michael Saylor, who was speaking at the Bitcoin Conference 2023 held at the Miami Beach Convention Center on May 19, explained that the updated guidance is a beneficial change for corporations heavily invested in digital assets. On Stocktwits, discussion around MSTR turned bullish, reflecting heightened investor optimism as Bitcoin prices also experienced a nearly 4% recovery, trading over $117,000 at the time.

Previously, the company had anticipated falling under the CAMT due to high unrealized gains in Bitcoin, especially given its substantial investments. The recent guidance marks a departure from proposed regulations released in September 2024, which could have required corporations like Strategy to pay the minimum tax if they surpassed a billion dollars in average AFSI over three years.

In the company announcement, Strategy confirmed it had added another 196 BTC to its holdings, bringing its total to over 640,000 BTC. With Bitcoin’s recent price surge, its total reserves now have unrealized gains near 60%.

Bloomberg analyst James Seyffart noted via X that Strategy’s position may qualify it for inclusion in the S&P 500 index come December. Analysts predict the company will report a net income of $2.9 billion for the third quarter, with earnings expected to be around $10 per share, marking its second consecutive profitable quarter primarily due to its Bitcoin reserves.