IRS Guidance Eases Crypto Tax Burden for Large Corporations

The Internal Revenue Service (IRS) has issued interim guidance that could significantly reduce tax burdens for corporations holding digital assets like Bitcoin. Under the updated rules, C Corporations generating over $1 billion in annual revenue will no longer be required to pay taxes on unrealized capital gains under the Corporate Alternative Minimum Tax (CAMT). This adjustment is particularly beneficial for companies such as MicroStrategy (MSTR) and Marathon Digital Holdings (MARA), both of which hold substantial amounts of Bitcoin on their balance sheets.

Legal experts highlight the importance of this change. Brett Cotler, partner at Seward & Kissel, noted that the relief primarily benefits Digital Asset Treasury (DAT) companies and other large corporations that hold volatile assets. Without this adjustment, businesses faced the risk of being taxed on unrealized gains without having the necessary liquidity, often forcing asset sales to cover tax liabilities. By removing the mark-to-market requirement for certain assets, the IRS is helping firms better manage volatility and avoid unnecessary asset liquidation.

Importantly, this is not a crypto-specific regulation. According to Shehan Chandrasekera, head of tax strategy at CoinTracker, the CAMT applies broadly to corporations with revenues exceeding $1 billion, a threshold met by most S&P 500 companies. While crypto assets highlight the challenges of unrealized gains due to volatility, the same principle extends to other asset classes.

Although the IRS guidance remains interim, corporations can rely on it when preparing their tax filings next year. Typically, such interim measures transition into proposed rules before finalization, signaling the agency’s broader direction. Companies won’t need to file until April 2025, with extensions possible until October, giving both taxpayers and the IRS time to adapt.

This development underscores how evolving tax policy is adapting to the complexities of digital assets and large-scale corporate holdings, offering clarity and relief for businesses navigating the volatile crypto landscape.