Strategy gains $8B in market cap after IRS waiver
Strategy has rallied 8% since the new guidance from the US Treasury and IRS waived the company of a multi-billion dollar tax bill.
On September 30, the IRS clarified that, pursuant to its taxation rights under the Inflation Reduction Act of 2022, Strategy “may disregard unrealized gains and losses on its digital asset holdings” when computing income that might be subject to the 15% corporate alternative minimum tax (CAMT).
Strategy invests in bitcoin (BTC) and has substantial, unrealized gains on its investment.
According to founder Michael Saylor, the company’s lifetime cost basis is $73,983 or about 34% lower than today’s BTC price.
It owns $76.7 billion worth of BTC acquired for just $47.3 billion — giving it $29.4 billion in unrealized gains.
As such, if Strategy had been forced to pay a 15% CAMT on most of that $29.4 billion — or even just its 2024 fiscal year unrealized gains — it could have found itself with a tax bill in the region of $2-4 billion.
Read more: 94% of Strategy’s bitcoin buys since August were from diluting MSTR
Strategy gains $8 billion in market cap since IRS waiver
Since its $91.3 billion market cap as of the close of trading on September 30 — the day of the IRS interim guidance — Strategy’s common stock MSTR has rallied more than 7% and gained more than $8 billion in market cap as of publication time.
Although some of that rally might be partially attributable to the fortunate tax outcome, the price of BTC is likely responsible for the majority.
Since September 30, BTC has rallied 4.6%. As a leveraged play on BTC, MSTR often outperforms BTC on certain timeframes.
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