MicroStrategy Sells Off Bitcoin

[LegendaryK]

https://decrypt.co/118061/microstrategy-sells-off-bitcoin-first-time-buys-even-more

Micro Strategy sold 704 BTC for about $11.8 million on December 22, the company wrote today in a filing with the United States Securities and Exchange Commission (SEC)—a move that may benefit the company in terms of tax liabilities, given how much value BTC has lost since MicroStrategy first began acquiring the cryptocurrency in 2020.

“MicroStrategy plans to carry back the capital losses resulting from this transaction against previous capital gains, to the extent such carrybacks are available under the federal income tax laws currently in effect, which may generate a tax benefit,” the company wrote

You have this giant corp, that just attempted a stock move that most people in the US do to lower their taxes for the year.
But in all of this company , no one bothered talking to a CPA or anyone that understand investment taxes.  


https://www.fidelity.com/learning-center/personal-finance/wash-sales-rules-tax

The wash-sale rule prohibits selling an investment for a loss and replacing it with the same or a "substantially identical" investment 30 days before or after the sale.
If you do have a wash sale, the IRS will not allow you to write off the investment loss which could make your taxes for the year higher than you hoped.
You may have seller's remorse in a down market. Or you may be trying to capture some losses without losing a great investment.
However it happens, when you sell an investment at a loss, it's important to avoid replacing it with a "substantially identical" investment 30 days before or 30 days after the sale date.
It's called the wash-sale rule and running afoul of it can lead to an unexpected tax bill.

And here is where MicroStrategy nullified their taxable losses.  

https://decrypt.co/118061/microstrategy-sells-off-bitcoin-first-time-buys-even-more

However, the firm then turned around and purchased 810 BTC for about $13.6 million on December 24.

So the genius at MicroStrategy, just negated any tax losses because they broke the wash-sales-rules.

GEEZ  

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[Aanuoluwatofunmi]

One thing you need to understand about microstrategy is it's kind of techniques used in buying and selling, at some certain point in time i begin to observe it purchasing pattern likely linked to DCA purchasing pattern whereby it has preciously bought some on a frequent occasions and within a short interval of time, yet it keep purchasing the dip and continue with accumulation, now that it has decided to sell at the dip and yet forfeiting the tax pay and losses, i think it has something in plan for making another buy coming this new year, maybe it sensed a drop or little more dip coming between now and January in other to have more opportunity to accumulate more, but let wait and anticipate for more coming out from them.

[LegendaryK]

One thing you need to understand about microstrategy is it's kind of techniques used in buying and selling, at some certain point in time i begin to observe it purchasing pattern likely linked to DCA purchasing pattern whereby it has preciously bought some on a frequent occasions and within a short interval of time, yet it keep purchasing the dip and continue with accumulation, now that it has decided to sell at the dip and yet forfeiting the tax pay and losses, i think it has something in plan for making another buy coming this new year, maybe it sensed a drop or little more dip coming between now and January in other to have more opportunity to accumulate more, but let wait and anticipate for more coming out from them.

They can buy or sell as they see fit, but any tax benefits they thought they were going to get, they have lost due to not following the wash-sales-rules.
All they had to do was wait 31 days before buying more and their tax benefits would not have been lost.
I find it hard to believe, that they made such a rookie mistake, but they did.  

If those btc were purchased near the $64K top,
then MicroStrategy just lost close to $33 million bucks in tax write-offs, ugh, that is a very bad day. 

[DaveF]

1) Since BTC is considered by the IRS to be an physical asset wash trading rules do not always apply

2) Depending on who they bought it from open market or not. And the fact that due to the holidays there are a couple of bank holidays between where they bought it and such, they might not take 'possession' of said IRS physical asset till sometime in Feb 2023.

It's obvious you never owned / operated a business in the US. Things like this are very common this time of year. A consultant I deal with just got paid for a bunch of work that he does not even have scheduled yet. But, his customer wanted the cash off the books. A client of ours sold off a bunch of old equipment, bought the replacements for them but are not taking delivery till next week.

And so on.

Welcome to the corporate world.

-Dave

[franky1]

oh leg-end. you might wanna try harder

these large companies do day trading where even at the per second rate one trade can rebalance another trade.

if you think a company has to wait 30 days before doing any negative trading to rebalance positive trading. you really need to start to look into the rules better.

what a company does which affects their capital gains is different than what an individual investor does that affects their income tax.

different rules apply

[LegendaryK]

1) Since BTC is considered by the IRS to be an physical asset wash trading rules do not always apply

2) Depending on who they bought it from open market or not. And the fact that due to the holidays there are a couple of bank holidays between where they bought it and such, they might not take 'possession' of said IRS physical asset till sometime in Feb 2023.

It's obvious you never owned / operated a business in the US. Things like this are very common this time of year. A consultant I deal with just got paid for a bunch of work that he does not even have scheduled yet. But, his customer wanted the cash off the books. A client of ours sold off a bunch of old equipment, bought the replacements for them but are not taking delivery till next week.

And so on.

Welcome to the corporate world.

-Dave

After a little more research :  https://bitcoin.tax/blog/crypto-wash-sale-rule/
You are right the US has a bill to apply the wash sale rule to crypto , but the bill stalled so this may be the last year it works in the US.
Canada, Australia and Ireland are among the countries that have already have a wash sale rule for crypto.

Well good for MicroStrategy, looks like they will get to write off $33 million or so on their taxes.


@franky1 , since this subject was answered to completion, I shall lock the topic so you can be petty somewhere else.