MicroStrategy isn’t early adopting new accounting for its Bitcoin: Are big taxes the reason why?

New accounting rules for crypto assets are expected to increase Microstrategy’s net income, yet it’s not jumping onboard. Is the extra profit not worth paying a 15% AMT?

Public companies that invest in digital assets such as bitcoin as a key business strategy face challenges in implementing long-term tax strategies. That’s because, as Francine McKenna reported for CoinDesk in February 2022, insufficient guidance from tax authorities and other regulators on financial reporting are making tax planning tough:

“…it took five years after bitcoin launched in 2009 before tax authorities issued any substantive guidance. Multinationals face significant tax uncertainty when investing in digital assets, transacting with crypto, facilitating crypto purchases and sales and using crypto to pay interest.”

New accounting guidance for crypto assets, adopted by FASB on December 13, 2023, was intended to support the growing presence of crypto assets on balance sheets, but ironically may further complicate tax treatment for the public company most invested in bitcoin as a business model: MicroStrategy (Ticker: MSTR).