Treasury to Exempt Bitcoin from 15% CAMT Tax on Unrealized Gains, Saving Strategy Billions

Core Insights - The Treasury Department is set to exempt crypto holdings from the Corporate Alternative Minimum Tax (CAMT), potentially eliminating a multibillion-dollar tax liability for companies like Strategy that hold significant Bitcoin reserves [1][2]. Group 1: Tax Implications - The exemption addresses the 15% minimum tax on large corporations' financial statement income, which would have imposed taxes on unrealized digital asset gains due to mark-to-market accounting rules [2][3]. - Strategy holds approximately 640,031 Bitcoin, valued at over $74 billion, with unrealized gains exceeding $27 billion, facing potential federal tax liabilities starting in 2026 under the Inflation Reduction Act [3]. Group 2: Industry Response - The exemption follows pushback from Strategy and Coinbase, which jointly urged the Treasury to exclude unrealized crypto gains, arguing that taxing paper profits creates unfair treatment compared to traditional assets and could disadvantage U.S. firms [4]. - Concerns were raised about the constitutional implications of taxing income that does not exist, as well as the potential need for asset sales to cover tax liabilities [4]. Group 3: Regulatory Developments - The Treasury issued Notice 2025-49, providing interim guidance on CAMT application and announcing plans for revised regulations, including an "FVI Exclusion Option" for disregarding fair value measurement adjustments for digital assets [5]. - The guidance also introduces a "Hedge Coordination Option" for certain hedging transactions, addressing distortions from unrealized gains and losses in financial statement income calculations [6]. Group 4: Upcoming Hearings - The Senate Finance Committee is scheduled to hold a hearing titled "Examining the Taxation of Digital Assets," featuring key industry representatives and tax experts [7].