jasontheoriginal on Nostr: For all those folks saying MSTR is going to have to pay taxes on $18 billion of ...
For all those folks saying MSTR is going to have to pay taxes on $18 billion of unrealized gains when they switch to FASB accounting please stop being an idiot. MSTR would be fools to pay a dime. The IRS doesn't have the constitutional authority to do so. Any company that would pay a substantial tax without filing an easily winnable lawsuit would be retarded. In the past it has been upheld multiple times by the Supreme Court that you need a realization event to tax. That is called precedent and that clause in CAMT would be tossed out the minute it got infront of a judge. I don't think Saylor is that retarded. Although I do question some of his takes.
The 16th Amendment to the U.S. Constitution, which allows Congress to tax income without apportioning it among the states, does not explicitly state that unrealized gains—or increases in the value of assets that have not been sold—constitute taxable income.
Key Constitutional Issues
1. The 16th Amendment (1913)
The amendment states:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
The key phrase here is "taxes on incomes", which traditionally refers to realized income—money or value actually received.
2. Eisner v. Macomber (1920) – Supreme Court Ruling on Income Tax
The Supreme Court ruled that income, as defined by the 16th Amendment, requires an actual realization event—such as a sale or transaction.
The ruling stated that a mere increase in the value of an asset does not constitute taxable income until it is realized through a sale.
3. Modern Precedents and Possible Challenges
While subsequent Supreme Court decisions have expanded the government's ability to tax income, no ruling has explicitly overturned the requirement for realization.
If the Corporate Alternative Minimum Tax (CAMT) under the Inflation Reduction Act leads to companies paying taxes on unrealized capital gains, it could be challenged on constitutional grounds.
Critics argue that taxing unrealized gains effectively functions as a wealth tax, which the Supreme Court has traditionally ruled must be apportioned among states.
Potential Legal Challenges
If a company like MicroStrategy is forced to pay taxes on unrealized Bitcoin gains, it could argue that this violates the 16th Amendment because the gains haven’t been realized as income.
The 16th Amendment to the U.S. Constitution, which allows Congress to tax income without apportioning it among the states, does not explicitly state that unrealized gains—or increases in the value of assets that have not been sold—constitute taxable income.
Key Constitutional Issues
1. The 16th Amendment (1913)
The amendment states:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
The key phrase here is "taxes on incomes", which traditionally refers to realized income—money or value actually received.
2. Eisner v. Macomber (1920) – Supreme Court Ruling on Income Tax
The Supreme Court ruled that income, as defined by the 16th Amendment, requires an actual realization event—such as a sale or transaction.
The ruling stated that a mere increase in the value of an asset does not constitute taxable income until it is realized through a sale.
3. Modern Precedents and Possible Challenges
While subsequent Supreme Court decisions have expanded the government's ability to tax income, no ruling has explicitly overturned the requirement for realization.
If the Corporate Alternative Minimum Tax (CAMT) under the Inflation Reduction Act leads to companies paying taxes on unrealized capital gains, it could be challenged on constitutional grounds.
Critics argue that taxing unrealized gains effectively functions as a wealth tax, which the Supreme Court has traditionally ruled must be apportioned among states.
Potential Legal Challenges
If a company like MicroStrategy is forced to pay taxes on unrealized Bitcoin gains, it could argue that this violates the 16th Amendment because the gains haven’t been realized as income.