Strategy: The dividend distribution of preferred shares in 2025 will be treated as tax-free capital return

Odaily Planet Daily reports that Bitcoin Treasury Company Strategy announced that, based on the scale related to U.S. federal income tax, all dividend distributions of its preferred stock in 2025 will be considered tax-free return of capital (ROC) within the shareholder’s corresponding tax basis. This information has been disclosed through Form 8937. The distributions will be treated as a return of capital and will accordingly reduce the shareholder’s tax basis in the related preferred stock instruments. If the distribution exceeds the tax basis, it will be treated as a capital gain. Strategy further stated that in 2025, it raised approximately $5.5 billion through five perpetual preferred stock offerings, followed by an additional approximately $1.9 billion through an ATM plan, with a total fundraising of about $7.4 billion. To date, the company has paid approximately $413 million in dividends, corresponding to a weighted annualized dividend rate of about 9.6%.

Strategy expects that there is currently no accumulated earnings and profits (E&P) under U.S. tax law, so it is anticipated that the preferred stock distributions will continue to be treated as ROC for a longer period (possibly over 10 years). However, the final tax outcome may be adjusted based on the company’s financial situation, and different investors may experience varying tax scenarios. (Businesswire)