A recent Wall Street Journal article with the headline “MicroStrategy Suddenly Has a Tax Problem and Needs Help from Trump's IRS” has become a source of fear and confusion.

But let's figure out why it's just FUD (fear, insecurity, and doubt).

What is the corporate alternative minimum tax?

This tax, introduced through the Biden administration's "Inflation Reduction Act" (IRA), requires large companies to pay a minimum of 15% based on adjusted income from financial statements (AFSI).

But the key point is how this income is calculated. The IRS has already left room for interpretations that may exclude unrealized gains from the AFSI calculation.

Bitcoin, MicroStrategy, and the New Accounting Standard

Starting in 2025, according to the new GAAP rules (ASC 2023-08), companies owning bitcoins will reflect their value at the market price.

Changes in the fair value of crypto assets will now be reflected in net income, which increases the potential for tax risks if the IRS does not grant exceptions.

MicroStrategy understands this risk and has already contacted the IRS with an explanation. Moreover, the IRS has granted temporary exemptions for companies like Berkshire Hathaway, which forms the legal basis for a similar exemption for crypto assets.

Political support

The Trump administration has introduced new initiatives that Support the cryptocurrency industry:

• Repeal of past regulatory restrictions.
• Ban on issuing central bank digital currencies (CBDCs).
• Support the growth of digital assets and blockchain technologies.

These steps create favorable conditions for companies like MicroStrategy and may provide long-awaited regulatory clarity.

Why is this important for investors?

1. Stability of tax policy. The IRS has already shown that excluding unrealized gains from the AFSI calculation is a realistic prospect.

2. The role of new accounting. ASC 2023-08 will not affect operating profit, but only the fair value of assets. This relieves the burden of tax obligations.

3. Strong political support. Trump is an ally of the crypto industry, and current initiatives give confidence in the future.

Conclusion

MicroStrategy will not pay billions in taxes on unrealized income. The current situation shows that fears around the new rules are overblown.

We see the formation of a strong legal and political foundation for the growth of the crypto industry.