WTF is this shit, its all qualified dividends?

(http://www.autoadmit.com/thread.php?thread_id=5759473&forum_id=2],#49164041)

Here’s a breakdown of **MicroStrategy’s Variable Rate Series A Perpetual Stretch Preferred Stock ("STRC")**, and a look at its potential **tax implications**:

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## What Is STRC?

* **What it is:** STRC is a **new perpetual preferred stock** issued by MicroStrategy (now branded as “Strategy”) that pays **variable, monthly dividends**.

* **Key features:**

* **Ticker:** STRC

* **Type:** Senior preferred stock (but junior to some other preferred series and all debt) ([SEC][1]).

* **Offering size:** \~\$2.5 billion in new preferred shares at an initial price of \$90 per share, with a \$100 face (liquidation) value ([Barron's][2], [Strategy][3]).

* **Dividend rate:** Starts around **9–10% annually**, paid monthly. The rate can be adjusted by the board to target maintaining STRC’s trading price near its \$100 face value ([Barron's][4], [Financial Times][5], [SEC][6]).

* **Strategic purpose:** STRC is a way for MicroStrategy to raise capital—particularly for buying more Bitcoin—without diluting equity holders. Preferred issuance is more costly (8–10% yield) than issuing common stock, but it **avoids dilution** and offers greater flexibility ([Barron's][7], [Financial Times][5]). The structure ties dividends to market conditions to help maintain share price, making it behave like a short-duration income vehicle ([Financial Times][5], [Barron's][4]).

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## Tax Considerations

* **Dividend treatment:** For most investors, dividends from STRC will be treated as **ordinary income** (not qualified dividend income) unless a specific election applies.

* **Corporate investors:** Companies holding STRC may benefit from the **Dividends Received Deduction (DRD)**, reducing taxable income depending on ownership percentage. The prospectus suggests other tax-related features, including a **plan for “tax redemption”** should certain tax events arise ([Strategy][8], [SEC][6]).

* **Outline in Prospectus:** The 424B5 filing includes a summary of relevant U.S. federal income tax considerations and mentions provisions for tax-triggered redemptions, but doesn't dive deeply into every tax nuance ([SEC][6]).

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## Summary Table

| Feature | Details |

| -------------------------- | ------------------------------------------------------------------- |

| **Type** | Variable-rate perpetual preferred stock |

| **Dividend Rate** | \~9–10% annually, paid monthly |

| **Purpose** | Raise capital for Bitcoin acquisition and dividend obligations |

| **Market Behavior** | Designed to stay near \$100 face value through dividend adjustments |

| **Dividend Tax Treatment** | Generally taxed as ordinary income |

| **Corporate Tax Benefit** | Possible DRD for qualifying entities |

| **Tax Redemption Clause** | Strategy can redeem all shares if certain tax triggers occur |

---

### TL;DR:

STRC is a smart, adaptive funding lever for MicroStrategy to raise cash—especially for Bitcoin acquisition—without issuing common stock. The dividend is attractive but taxable as ordinary income for most. Corporations might enjoy favorable tax treatment via DRD. There’s also a “tax redemption” mechanism that protects both parties if conditions change.

Let me know if you want to dive deeper into how STRC compares with traditional preferreds or dividend mutual funds!

[1]: https://www.sec.gov/Archives/edgar/data/1050446/000119312525167987/d43815d8k.htm?utm_source=chatgpt.com "8-K - SEC.gov"

[2]: https://www.barrons.com/articles/microstrategy-bitcoin-stock-preferred-eebb190c?utm_source=chatgpt.com "MicroStrategy Sells $2.5 Billion of Preferred Stock. What to Know About the Complicated Bitcoin Play."

[3]: https://www.strategy.com/press/strategy-announces-closing-of-2-point-521-billion-STRC-stock-initial-public-offering_07-29-2025?utm_source=chatgpt.com "Strategy Announces Closing of $2.521 Billion STRC Stock Initial ..."

[4]: https://www.barrons.com/articles/microstrategy-bitcoin-preferred-stock-yield-6c46f52e?utm_source=chatgpt.com "MicroStrategy to Offer Preferred Stock With a Twist That Could Yield 10%"

[5]: https://www.ft.com/content/b4ce1e14-5553-4d15-b6aa-a8b09f79f7c1?utm_source=chatgpt.com "Strategy stretches for more cash"

[6]: https://www.sec.gov/Archives/edgar/data/1050446/000119312525165531/d852456d424b5.htm?utm_source=chatgpt.com "424B5 - SEC.gov"

[7]: https://www.barrons.com/articles/microstrategy-stock-price-bitcoin-earnings-603b10e4?utm_source=chatgpt.com "MicroStrategy Stock Drops 9%. New Equity Guidelines Could Be the Reason."

[8]: https://www.strategy.com/press/strategy-announces-pricing-of-strc-perpetual-preferred-stock_07-25-2025?utm_source=chatgpt.com "Strategy Announces Pricing of STRC Perpetual Preferred Stock"

(http://www.autoadmit.com/thread.php?thread_id=5759473&forum_id=2],#49164042)