Microstrategy Inc. is a software company developing software for enterprises. It was established in 1989 by Michael J. Saylor, Sanju Bansal and Thomas Spahr. The company first came into limelight when it started purchasing Bitcoin and soon became the largest corporate buyer/holder of Bitcoin.
It is the first time in the history of MicroStrategy that it sold 704 btc tokens on December 22nd, 2022 for the sum of $11.8million in cash citing tax purposes before buying 810 more on them two days later.
In an SEC filing on December 28th, 2022, the company noted that “MicroStrategy plans to carry back the capital losses resulting from this transaction against previous capital gains.”
Explaining the sale, the company stated: This “may generate a tax benefit.”
MicroStrategy started purchasing cryptocurrencies in 2020, and in just a few days, it will complete two years of purchasing BTC. Notably, in these two years, the company never sold any bitcoin.
Sean Farrell (Tax Watcher) head of digital-asset strategy at Fundstrat, said there is a crypto-specific “wash rule” that would apply to the market as cryptocurrencies are not deemed securities.
“So we’re operating in this world in which, for lack of a better word, it’s a loophole where if you are sitting on a position below cost, you are able to sell that position and immediately re-buy those assets at the same spot price,” Sean noted.
“That’s essentially what MicroStrategy is trying to do to optimise their holdings and help obtain some tax relief,” he added.
Shrish Jajodia, head of investor reactions and treasury at MicroStrategy noted that “There is no change to our Bitcoin strategy, which is to acquire and hold Bitcoin for the long term.”
MicroStrategy stock price fell around 75% in the last one year. The Pre-market data shows that its price could touch $138.08 in today’s trading session.
According to Michael Saylor, the executive chairman and co-founder of MicroStrategy, bitcoin will again trade at $69,000 in the coming four years.
In an interview in September, he further predicted that Bitcoin would trade at $500,000 in the coming ten years with a market capitalization equal to that of gold.
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