Bitcoin rally delivers $4.1 billion tax windfall for Strategy

Strategy estimated a $4.1 billion income-tax benefit after Bitcoin's fair value rose above cost as of Sept. 30, according to its Oct. 5 filing. The benefit comes from a lower estimated tax expense through an accounting adjustment.The filing shows what can change when Bitcoin crosses a large holder’s cost basis. The next consequence depends on the position being measured: a company’s Bitcoin holdings, an ETF’s underlying assets and an investor’s ETF shares each have their own purchase history.Strategy said it reversed a deferred tax asset related to its Bitcoin and released the associated valuation allowance. These management-prepared financial figures had neither been audited nor reviewed by KPMG.The estimated benefit concerns the company’s own tax accounts and its September valuation-allowance adjustment.The company disclosed 848,000 BTC at an average purchase price of $75,440.70, including fees and expenses, as of Oct. 4 at 4 p.m. Eastern time. That later acquisition figure has a separate cutoff from the Sept. 30 accounting comparison.Fund cost and shareholder break-even are separateAn ETF acquisition estimate measures the fund’s underlying holdings. Maketo estimated the average ...