01—Abstract
Summary
Summary of the 8-K filed February 2, 2026. Cited figures are marked; the original filing is the authoritative source.
Strategy Inc (Nasdaq: STRF/STRC/STRK/STRD/MSTR; LuxSE: STRE) filed this Form 8-K under Item 8.01 (Other Events) to announce the U.S. federal income tax treatment of distributions paid in 2025 on its preferred equity instruments.
The company states that 100%a of 2025 preferred distributions were treated as a nontaxable return of capital (ROC) to the extent of a recipient shareholder's tax basis, as reported on Forms 8937. Any excess over basis is treated as capital gain, and the distributions reduce the shareholder's tax basis in the relevant preferred instruments. The filing also addresses the company's tax position going forward.
Strategy believes it has no accumulated earnings and profits (E&P) for U.S. federal income tax purposes and does not expect to generate current E&P this year or in the foreseeable future. On that basis, it expects preferred distributions to be treated as ROC for the foreseeable future, which it describes as ten years or more. The company cautions that its E&P expectations may change, and any change could affect the tax treatment of distributions.
Shareholders are directed to their own tax advisors. The press release attached as Exhibit 99.1 also reports scale metrics for the "Digital Credit" preferred instruments: five IPOs in 2025 raising $5.5 billionb in gross proceeds, a further $1.9 billion raised through at-the-market programs, and $413 million in cumulative distributions paid to date, at a blended annual dividend rate of 9.6%.
02—Key points
Key Highlights
- 100% of distributions paid on Strategy's preferred equity instruments during calendar 2025 were treated as a nontaxable return of capital for U.S. federal income tax purposes, to the extent of recipients' tax basis, as reported on Forms 8937.
- Distributions in excess of a shareholder's tax basis are treated as capital gain; ROC distributions reduce the basis in the applicable preferred instruments.
- Strategy believes it has no accumulated earnings and profits (E&P) and does not expect to generate current E&P in 2026 or the foreseeable future, so ROC treatment is expected for ten years or more.
- In 2025, Strategy completed five IPOs of perpetual preferred "Digital Credit" securities raising $5.5 billion gross, and has raised an additional $1.9 billion through ATM programs since.
- Cumulative distributions paid across the Digital Credit instruments total $413 million, at a blended annual dividend rate of 9.6%.
- The company warns that a change in its E&P expectations could alter the U.S. federal income tax treatment of distributions.
- The filing is informational under Item 8.01 and includes forward-looking statements, and the company disclaims any obligation to update them.
03—Questions
Frequently Asked Questions
Are dividends on Strategy's preferred stock taxable for 2025?
The company states that, for U.S. federal income tax purposes, 100% of 2025 distributions on its preferred equity instruments were treated as a nontaxable return of capital, to the extent of the recipient's tax basis, as reported on Forms 8937. Distributions above basis are treated as capital gain.
What does return of capital treatment mean for shareholders?
A return-of-capital distribution is not taxed as income when received. Instead, it reduces the shareholder's tax basis in the preferred instruments. Once the distribution exceeds that basis, the excess is treated as capital gain.
Why does Strategy expect this treatment to continue?
Strategy believes it has no accumulated E&P for U.S. federal income tax purposes and does not expect to generate current E&P this year or in the foreseeable future. On that basis, it expects ROC treatment to continue for ten years or more.
Could the tax treatment change?
Yes. Strategy says its E&P expectations may change, and any such change could affect the U.S. federal income tax treatment of the distributions. Shareholders should consult their own tax advisors on their individual circumstances.
How large are the Digital Credit preferred offerings?
The filing's press release states that five 2025 IPOs of perpetual preferred securities raised $5.5 billion in gross proceeds, with a further $1.9 billion raised through ATM programs since. Cumulative distributions paid to date total $413 million, at a blended annual dividend rate of 9.6%.
04—Continue