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$BTC Strategy Confirmation of Tax-Free Capital Return Treatment for Preferred Share Dividends in 2025

Recent news indicates that Strategy (formerly MicroStrategy) has officially confirmed that all preferred share dividends for the fiscal year 2025 will be classified as "Return of Capital" under U.S. tax law, rather than taxable income. This confirmation holds significant financial and tax implications for the company's current and potential investors.

In the U.S. tax system, dividends classified as Return of Capital are not taxed as ordinary income in the current period, but instead are used to adjust the investor's cost basis. This means that investors do not have to pay income tax immediately upon receiving dividends, which enhances cash flow efficiency and makes such securities more attractive in asset allocation.

For Strategy, this tax treatment aligns well with its unique asset-liability structure. The company uses Bitcoin as its core reserve asset while funding its long-term strategy through the issuance of preferred shares. The tax-free capital return in the form of dividends helps maintain stable return expectations without increasing the tax burden on investors.

From a broader market perspective, this confirmation also signals that within a compliant framework, companies can still create more efficient return mechanisms for investors through refined capital structure design. This is particularly attractive to institutional investors who focus on Bitcoin exposure while also valuing cash flow and tax efficiency.

Overall, this move by Strategy is not only a technical tax confirmation but also an important component of its long-term capital management strategy. In an environment of heightened market volatility, this certainty itself constitutes a form of value. #Strategy increases Bitcoin holding

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