The company Strategy has experienced an 8% surge following the recent announcement from the US Treasury and IRS, which exempted it from a hefty tax obligation worth billions.
On September 30, the IRS issued a clarification regarding its taxation authority under the Inflation Reduction Act of 2022. It stated that Strategy can exclude unrealized gains and losses on its digital asset holdings when calculating income potentially subject to the 15% corporate alternative minimum tax (CAMT).
Strategy’s investments include bitcoin (BTC), where it holds significant unrealized profits.
Founder Michael Saylor mentioned that their average cost per BTC is $73,983, approximately 34% below today’s market price for BTC.
The company possesses $76.7 billion in BTC assets acquired at just $47.3 billion — resulting in $29.4 billion of unrealized profit.
If Strategy had been required to pay a 15% CAMT on most of this $29.4 billion — or even just on its unrealized gains for fiscal year 2024 — it might have faced a tax liability ranging between $2-4 billion.
Read more: Since August, diluting MSTR accounted for about 94% of Strategy’s bitcoin purchases
IRS waiver boosts Strategy’s market cap by $8 billion
Since closing with a market capitalization of $91.3 billion on September 30 — coinciding with the day IRS released interim guidance — shares of MSTR have risen over 7%, adding more than $8 billion to its market cap as reported at publication time.
This increase may partly result from favorable tax developments but is primarily driven by rising BTC prices.
Since September’s end, BTC has climbed by about 4.6%. As an investment closely tied to BTC performance, MSTR often surpasses BTC during specific periods.