MSTR To clear up any misunderstandings on the tax situation that MSTR finds itself in, I'll try be break this down a little more clearly because it is confusing. It doesn't seem fair that they have to pay taxes on unrealized gains, but that is indeed what the new tax rule imposes. Everyone that has been cheering about MSTR now being able to count BTC gains as real income evidently doesn't realize this could lead to MSTR's downfall.
On January 1st this year, MSTR adopted new accounting rules (ASU 2023-08) that required them to revalue all their Bitcoin holdings at market value. That caused a $12.745B increase to retained earnings, which now must be recognized equally over four years (2025–2028) for tax purposes... Meaning $3.186 billion per year is treated as taxable income even though it's just an accounting adjustment for prior years.
Under the 2022 Inflation Reduction Act’s (IRA) Corporate Alternative Minimum Tax (CAMT), companies like MSTR must pay 15% tax on Adjusted Financial Statement Income (AFSI) if their average AFSI exceeds $1 billion. So even if Bitcoin crashes and MSTR shows paper losses or real losses, they’ll still owe 15% on that $12.745B ($3.186B per year) no matter what.
And if Bitcoin rallies sharply, like the quarter just ended where MSTR reported $14B in gains, that amount, plus the $3.186B retained earnings portion, is part of GAAP net income, so MSTR will instead owe 21% federal tax plus 6% Virginia state tax on the full amount. So CAMT acts as a floor, but in strong years the standard corporate tax plus VA state tax hits even harder.
That's why MSTR is booking a tax liability of $6.31 billion as of June 30th. That $6.31B will have to be paid by shareholders in the form of massive dilution. Or MSTR will have to sell around 58,000 Bitcoins (at today's price) to cover the tax bill. Neither is a good option and both kill the MSTR narrative of acting like a BTC proxy with juice.
Why would an investor buy MSTR instead of IBIT or BITX that are not subject to these new taxes? Answer: They shouldn't. The ETFs offer a cleaner proxy to BTC and will likely provide a higher return moving forward.
This is a serious threat to the MSTR story. They simply can't afford to pay 27% of paper gains to Uncle Sam, 10%+ dividends to bond holders, debt interest/dilution and payroll for 2000 deadweight employees and expect to receive a premium over BTC spot price. In fact, considering the above, it should probably be discounted to spot price.
MSTR honest question: if mstr starts reporting profitability under the crypto accounting standards, wouldn't that mean it will become eligible for sp500 inclusion?
MSTR How many times has Saylor tweeted about or warned investors about the massive tax bill they face starting with this tax year? All these roadshow presentations for STRx bond offerings this year, not one mention has been made that the IRS and the state of VA will soon be raking in 28.8% of UNREALIZED Bitcoin gains. No mention on the Q1 earnings call either.
Bitcoin will have to increase 13.7% to $123.5k just to cover their current tax $6.31B tax liability before shareholders will see any increase in value. Or they will have to dilute shareholders 5.7% with an ATM just to pay the IRS. That's not counting the half-billion+ dollars worth of dividends and interest they will be paying next year too.
While Saylor can find time to tweet like a tween about "Sometimes you just got to HODL", never has he warned that he will have to "SEDL" or "DILUTDL" to pay their massive tax bill. You have to dig through their SEC filings to find that footnote.
MSTR During Q2 2025 that just ended, MSTR raised a total of $6.8B in capital, used mostly to buy BTC. Imagine if instead that would have went almost entirely to the IRS for paying deferred tax gains for the first 2 quarters of 2025, which totals $6.31B. Starting in 2026, MSTR will be required to send quarterly estimated payments to the IRS (waived for 2025) for unrealized gains... Assuming BTC goes up. That means even more shareholder dilution and far less BTC purchased. By April 15th 2026, MSTR will have to pay taxes on BTC gains for 2025 because they elected not to make quarterly payments this year.
The easy juice has already been squeezed from MSTR and future gains will be harder and harder for Saylor to achieve because debt, dilution and tax liabilities are working against him. It's simple math and the compounding effect becomes too great to overcome.
Eventually the market will realize that the only real winner from Saylor's Strategy is Uncle Sam, plus the Preferred Shareholders that will still get their dividend payouts every quarter.
Early investors got the easy juice and did well. But now the deferred convertible debt, tax liabilities (28.8%) and shareholder dilution makes further expansion of the mNAV nearly impossible. In fact, it is now already doing the opposite by contracting over time. I expect it will continue to do so as the implications of these new tax rules come into focus for the market.
Due to these new IRS regulations, Saylor is now between a rock and a hard spot: If BTC goes up, he must raise massive capital and dilute shareholders just to pay the tax bill. If BTC goes down and no taxes are due, the market is less interested in buying share ATM offerings and Saylor has to discount the preferred ATMs or sell proportionally more common stock to raise capital. Shareholders get wrecked while preferred holders get paid all the same.
If congress does not act to overturn the current rules, and they just missed the big beautiful opportunity to do so, then the requirement to pay 28.8% taxes on unrealized gains is a death sentence for MSTR. They simply can't give up a large portion of each ATM sale to set aside for taxes and still outrun shareholder dilution, buy more BTC and pay 10%+ dividends to preferred holders. Something will break.
MSTR To clear up any misunderstandings on the tax situation that MSTR finds itself in, I'll try be break this down a little more clearly because it is confusing. It doesn't seem fair that they have to pay taxes on unrealized gains, but that is indeed what the new tax rule imposes. Everyone that has been cheering about MSTR now being able to count BTC gains as real income evidently doesn't realize this could lead to MSTR's downfall. 
