Traditional companies pay dividends from profits → that’s taxable income. $STRC pays “dividends” from new equity issuance → that’s Return of Capital (ROC). Return of Capital ≠ income. It’s just your own basis being returned to you… tax-deferred.

The IRS says: ROC reduces your cost basis. You owe tax only when you sell for more than your basis. But here’s the catch... STRC’s share price is pegged at the $99-101 range. They literally adjust the dividend rate to keep it there. So when are you going to realize a large

Strategy confirmed it in their official Form 8937: “Based on current estimates… zero earnings & profits for 2025. Accordingly, 100% of the distribution is a non-taxable return of capital.” You read that right. Every dollar you receive from STRC in 2025 is tax-free cash flow.

Because the share stays at $100, your basis falls but the market value doesn’t. You’re extracting yield forever while your taxable gain floats in suspended animation. It’s not evasion. It’s temporal tax deferral with near-perfect price equilibrium.

Here’s the endgame: You receive ROC every month (no tax) Your basis slowly declines Price stays pegged at $99-101 range You borrow against it if you need liquidity You die Your heirs get a step-up in basis All taxes → deleted.

STRC has effectively built a synthetic perpetual bond backed by Bitcoin, funded through equity issuance, stabilized by a price peg, and wrapped in tax deferral. It’s yield without dilution. Income without income. A dividend that isn’t a dividend.

While the fiat crowd fights over “qualified vs ordinary dividends,” Strategy is literally creating perpetual Return of Capital loops powered by digital scarcity. It’s the next evolution of corporate finance. MONETARY RECURSION ENABLED BY BITCOIN.

This isn’t yield farming. This is yield alchemy. Bitcoin collateral in, equity out, cash flow distributed, taxes deferred. A feedback loop so elegant it almost feels illegal... ...except it isn’t.

STRC has turned the 20th-century dividend model into a 21st-century tax-optimized Bitcoin engine. The fiat world still thinks “Return of Capital” means less value. In reality, it’s the doorway to perpetual, untaxed cash flow. Seems like you can literally just collect ~9%-10%

FYI, I am NOT a tax professional so this is NOT financial advice. However, this is my read on the situation. Seems like if the IRS decides STRC distributions resemble accelerated repayment of principal rather than true equity yield, it could fall under the fast-pay stock

@AdamBLiv Adam, once the purchase price is returned, dividends become ordinary income. There’s no such thing as a free lunch. 🥙

@MD_ata21 I could be wrong, but I think once basis is fully recovered, further “return of capital” isn’t ordinary income, it’s capital gain under §301(c)(3). So with STRC, you’d get roughly a decade of true tax-free ROC, and even after that, future payouts are long-term capital gains, not

@AdamBLiv Adam isn’t it the case that once your basis falls below $0 then you do get taxed on the subsequent dividends?

@GabrielePacioc1 Not 100% sure, but this is the way I'm seeing it: Once basis hits $0, any further “dividends” that are still classified as Return of Capital under §301(c)(3) become capital gains, not ordinary dividends. You’re not being “paid” income, you’re realizing gains only to the extent

@AdamBLiv 🤔 It’ll be interesting to see how our brokerage reports this to us

@BMindSpec Indeed. Seems to me as if they are ROC as long as the divs are paid out via equity issuance (MSTR) instead of operating business cash flows.

@AdamBLiv And we can purchase this where?

@ranthiscal1time Fidelity. Robinhood. Interactive Brokers. I think pretty much anywhere.

@AdamBLiv I don’t think this is entirely correct. Once your basis hits zero the distributions would be taxed as LTCG, which would happen around year 9 or 10. After that if later sold, at a share price of $100, you’d be taxed again as a $100 LTCG. Still pretty tax efficient though.

@AdamBLiv Near as I can tell, this analysis holds up. "Strategy's E&P is likely insufficient to fully cover STRC dividends as ordinary dividends, given: The company's primary asset is Bitcoin (a capital asset with unrealized gains that don't contribute to E&P until sold). Strategy

@AdamBLiv Amazing. I haven’t bought because I figured it would be taxed at ordinary income rates as non-qualified dividends or interest. For a top bracket taxpayer, the tax equivalent yield of STRC becomes over 16%. @saylor has made tax exempt munis irrelevant

@AdamBLiv One thing I’d love them to stop being deceptive about is the monthly rate

@AdamBLiv Wait...so I'm not going to get ANY withholding tax for dividends if I have STRC in a tax efficient ISA? This stock just keeps getting better!

@AdamBLiv If this is truly the case, it means you're gonna start getting a K-1 to track basis. It also means that if you choose to sell before you die (lol) you will have a massive capital gain. Just like MLP's, which I've seen cause big headaches for people when they don't realize this.

@AdamBLiv by diluting shareholders

@AdamBLiv adam, what do you think happened with STRK? did you expect it to be down big on par with Stategy stock?

@AdamBLiv I am doubting this! I looked at my mom's Schwab acct, and it is showing that her basis has NOT changed! I assume that she will receive a 1099-Div form for 2025 showing ALL of her STRC dividends!! I sure hope that you're right. If you are, thee basis will become NEGATIVE soon!!

@AdamBLiv @grok since Adam is not a tax professional can you shed some light to the claim

@AdamBLiv My favorite part: "Seems like you can literally just collect ~9%-10% in perpetuity without paying taxes until you die and go meet Jesus."

@AdamBLiv It's not directly backed by BTC..

@AdamBLiv Your take is incorrect from a tax perspective. My god, it’s unbelievable how many people listen to your bullshit.

@AdamBLiv For boomers, it doesn't even come close to the hurdle rate No thanks