Strategy Inc (Nasdaq: STRF/STRC/STRK/STRD/MSTR; LuxSE: STRE) announced that 100% of distributions paid during calendar year 2025 on its preferred equity instruments were treated as a nontaxable return of capital (ROC) for U.
S. federal income tax purposes, as reported on Forms 8937. The company anticipates that distributions on its preferred equity instruments will continue to be treated as ROC for the foreseeable future, projected for ten years or more.
For U.
S. federal income tax purposes, such distributions reduce a shareholder’s tax basis in the applicable preferred equity instruments to the extent of that basis, with any excess treated as capital gain. Forms 8937 for each distribution are available on Strategy Inc’s investor relations website.
In 2025, Strategy Inc executed five initial public offerings of perpetual preferred equity securities, termed “Digital Credit,” which raised gross proceeds of $5.5 billion. Following these IPOs, an additional $1.9 billion in aggregate gross proceeds was raised through At-The-Market (ATM) programs for these Digital Credit instruments. To date, Strategy Inc has distributed $413 million in cumulative payments across these instruments, reflecting a blended annual dividend rate of 9.6%.
The company states that it believes it does not have any accumulated earnings & profits (E&P) for U.
S. federal income tax purposes and does not expect to generate current E&P in the current year or the foreseeable future. This expectation forms the basis for the projected ROC treatment of future distributions.
Shareholders are advised that special tax considerations may apply depending on their specific circumstances and should consult their own tax advisors regarding U.
S. federal, state, local, and any non-U.
S. tax consequences. The company also notes that its expectations on E&P may change, which could affect the U.
S. federal income tax treatment of distributions.
Strategy Inc operates as the world’s first and largest Bitcoin Treasury Company, a publicly traded entity that has adopted Bitcoin as its primary treasury reserve asset. The company strategically accumulates Bitcoin using proceeds from equity and debt financings, alongside cash flows from operations. Additionally, Strategy Inc provides AI-powered enterprise analytics software and explores innovation in Bitcoin applications.
