Financial Accounting Standards Board’s requirement to account digital assets at market value combined with Corporate Alternative Minimum Tax liabilities, creates unintended tax consequences as firms are now potentially taxed on unrealized gains from appreciated digital assets

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The issue stems from the interaction between the Inflation Reduction Act’s CAMT provision and new mark-to-market requirements issued by the Financial Accounting Standards Board (FASB). While the accounting shift, secured after prior engagement from crypto-friendly lawmakers, was designed to reflect fair-value treatment of crypto in corporate financial statements, it inadvertently subjected unrealized gains to taxation under CAMT for companies averaging $1 billion or more in AFSI.

However, the new FASB policy combined with the CAMT liabilities created unintended consequences, Lummis and Moreno wrote. Namely, if a firm's bitcoin holdings appreciated, it looks good on paper, but creates a tax liability on their unrealized gains, the person familiar said. As a result, firms like Strategy — and lawmakers like Lummis and Moreno — are lobbying the IRS for exemptions to mitigate this potential burden, similar to those granted for unrealized stock gains held by companies like Berkshire Hathaway.