Strategy: 2025 Preferred Stock Dividend Distributions to Be Treated as Tax-Free Return of Capital

Odaily News Bitcoin treasury company Strategy announced that, in accordance with relevant U.S. federal income tax regulations, all dividend distribution payments for its preferred stock in 2025 will be treated as tax-free return of capital (ROC) within the shareholders' corresponding tax basis. This information has been disclosed via Form 8937. The distribution payments will be considered a return of capital and will correspondingly reduce the shareholders' tax basis in the relevant preferred stock instruments. Any portion of the distribution exceeding the tax basis will be treated as capital gains. Strategy added that in 2025, it raised approximately $5.5 billion through five perpetual preferred stock offerings, followed by an additional approximately $1.9 billion raised via an ATM (At-The-Market) program, resulting in a cumulative fundraising scale of approximately $7.4 billion. To date, the company has paid approximately $413 million in dividend distributions, corresponding to a weighted annualized dividend yield of about 9.6%.

Strategy anticipates that it currently has no accumulated earnings and profits (E&P) under U.S. tax law. Therefore, it expects that preferred stock distributions may continue to maintain ROC tax treatment for a relatively long period in the future (potentially over 10 years). However, the final tax outcome may still be adjusted based on changes in the company's financial condition. The company also reminds that different investors may have varying tax situations. (Businesswire)