MicroStrategy Plans to Redeem $1.05B in Convertible Senior Notes Due in 2027

This decision comes as the company faces potential tax implications under new corporate alternative minimum tax (CAMT) rules introduced by the Inflation Reduction Act in 2022.

MicroStrategy (NASDAQ: MSTR) announced plans to redeem $1.05 billion in 0% convertible senior notes due in 2027.

The decision comes as the company faces potential tax implications under new corporate alternative minimum tax (CAMT) rules introduced by the Inflation Reduction Act in 2022.

As the world’s largest Bitcoin (CRYPTO: BTC)-holding company, MicroStrategy could be subject to federal income taxes on its $18 billion in unrealized Bitcoin gains.

The CAMT implements a 15% minimum tax rate based on adjusted GAAP financial statement income, a report by the Wall Street Journal noted.

GAAP income represents earnings reported under standardized accounting rules, including certain unrealized gains like Bitcoin’s value increases.

The CAMT is designed to target companies that report substantial GAAP earnings but minimal taxable income on IRS filings.

While companies like Berkshire Hathaway received exemptions for unrealized stock gains, no such provisions exist for crypto assets.

MicroStrategy, which now holds $47 billion in Bitcoin, continues to lobby the IRS for similar treatment.

“The IRS may ultimately exclude unrealized crypto gains, especially under a Trump administration, which has historically supported pro-crypto policies,” tax analyst Robert Willens told the Wall Street Journal, while adding that such exemptions aren’t guaranteed.

Note holders can convert their securities into class A common stock prior to February 20, 2025, with conversions to be settled in stock and fractional shares paid in cash.