Strategy Inc. shares rose the most in two weeks after the Bitcoin treasury company founded by Michael Saylor said that it will no longer be subject to the U.S. corporate alternative minimum tax.
As Bitcoin prices gained this year, Strategy expected in 2026 to be subject to the 15% corporate alternative minimum tax, which applies to companies exceeding $1 billion in a three-tax-year period preceding the initial tax year.
But under the the Department of the Treasury and the Internal Revenue Service interim guidance issued Tuesday, corporations can disregard unrealized gains and losses on their digital asset holdings when determining whether they are subject to the tax. So Strategy expects that it will no longer be subject to the corporate alternative minimum tax, according to a company filing.
"What the rule said was that when these companies mark their crypto assets to market, they have to pay taxes on that. When crypto goes up, they have to pay the taxes and when it goes down, it is not like the IRS would give their money back," said Brian Dobson, managing director for disruptive technology research at Clear Street. "This removes that overhang."
The company, formerly known as MicroStrategy, adopted accounting standards in January that required it to include fair value of its Bitcoin holdings in its earnings. As a result, Strategy had an $8.1 billion unrealized gain on its Bitcoin holdings for the six months ending June 30, according to a company filing. Strategy currently holds around $74.6 billion of Bitcoin.
"Strategy has previously disclosed a potential multi-billion cash tax liability that would have resulted under the CAMT, beginning in 2026," said Lance Vitanza, managing director and senior analyst at TD Cowen. "Thanks to yesterday's action on behalf of the IRS, that potential scenario is no longer on the table."
Strategy took the unrealized gain in the second quarter, resulting in net income of $10 billion, or $32.60 a share, for the period. Strategy is forecast to have earned about 13 cents a share in the quarter ended Sept. 30, according to the average estimate of analysts surveyed by Bloomberg.
The company is not going to have to accrue for the tax liability, so it won't have an impact on earnings, Dobson said.
Shares of Strategy rose as much as 6.7% to $343.73, the biggest increase since Sept. 18. The stock has more than doubled in the past year.
