On September 30, 2025, the Department of the Treasury (the “Treasury”) and the Internal Revenue Service (“IRS”) issued interim guidance (the
“Interim Guidance”) which, in relevant part, clarifies that a corporation may disregard unrealized gains and losses on its digital asset holdings when
computing adjusted financial statement income (“AFSI”) for purposes of determining whether it is subject to the 15% corporate alternative minimum tax
(“CAMT”) under the Inflation Reduction Act of 2022 (the “IRA”). The Treasury and IRS intend to issue revised proposed regulations similar to this
Interim Guidance.
Strategy No Longer Expects to be Subject to CAMT
In September 2024, the Treasury and IRS issued proposed regulations with respect to the application of CAMT. Under such proposed regulations, unless
an exemption applies, the proposed regulations would impose a 15% CAMT on a corporation with respect to an initial tax year and subsequent tax years
if the average annual AFSI for any consecutive three-tax-year period preceding the initial tax year exceeds $1 billion. On January 1, 2025, Strategy Inc
(the “Company”) adopted Accounting Standards Update No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting
for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires the Company to measure its bitcoin holdings at fair value in its statement
of financial position, with gains and losses from changes in the fair value of its bitcoin recognized in net income each reporting period. The Company
previously disclosed that, given the magnitude of the unrealized gain on its digital assets as of June 30, 2025, the Company expected that it would
become subject to CAMT in the tax years beginning in 2026 and beyond.
Pursuant to the Interim Guidance, the Company plans to exclude its unrealized gains and losses from the calculation of its AFSI for purposes of
determining whether it is subject to CAMT. As a result, the Company no longer expects to become subject to CAMT due to unrealized gains on its
bitcoin holdings.