Strategy to Implement Tax-Free Return of Capital on Preferred Stock Dividends Starting 2025

Strategy, a Bitcoin treasury company, has announced a significant change in its dividend policy starting in 2025. According to NS3.AI, dividends on its preferred stock will be treated as a tax-free return of capital (ROC) under U.S. federal income tax rules. This information was disclosed through Form 8937, which specifies that any dividend amount exceeding the tax basis will be classified as capital gains. The company has successfully raised approximately $7.4 billion through perpetual preferred stock offerings and has distributed about $413 million in dividends. The weighted annualized dividend rate stands at around 9.6%, and Strategy anticipates maintaining the ROC tax treatment for over the next decade.