MicroStrategy in Tax Troubles, Seeks Help from Trump’s IRS

After nearly five years of a flourishing Bitcoin accumulation journey, the business intelligence company MicroStrategy may soon face a significant hurdle.

According to a recent WSJ report, the publicly traded firm may have to pay billions of dollars in federal income tax imposed on the unrealized gain on its BTC portfolio. If this occurs, the leading corporate Bitcoin holder may be forced to liquidate some of its BTC stash.

Since mid-2020, MicroStrategy has committed to a frequent BTC acquisition practice, helmed by its co-founder and executive chairman, Michael Saylor. As of this writing, the business intelligence firm holds a Bitcoin stash of 461,000 BTC worth over $48.8 billion at the current price. It also has an unrealized profit of approximately $19 billion accumulated over the years.

MicroStrategy vs. IRS

Ideally, investment profits were not subject to taxation unless sold. However, in 2022, the United States Congress introduced the “corporate alternative minimum tax” under the Inflation Reduction Act, aimed at companies reporting high earnings with low taxable income. This rule mandates MicroStrategy to pay as much as 15% on its unrealized profit of $19 billion despite not selling it.

A document submitted by MicroStrategy and Coinbase to the IRS on January 2nd revealed that the two companies are requesting that the tax agency review the 2022 tax rule.

At this point, MicroStrategy could be vindicated from its potential tax troubles if the U.S. Internal Revenue Service (IRS) dispenses new rules that favor the business intelligence firm.

The chance of such a move coming from the IRS is not impossible, given that Donald Trump’s administration is friendly to the crypto industry. Shortly after his inauguration on Monday, Trump began fulfilling his crypto vows, such as releasing the troubled Silk Road founder Ross Ulbricht and signing an executive order to create a crypto reserve for the country.

Notably, MicroStrategy previously faced a tax issue in June 2024, where the firm paid $40 million to settle tax fraud allegations.