Bitcoin for a US C corporation

Checked 9 November 2026. Tax rates and rules change. Your accountant should confirm how they apply to your company.

This page is about United States companies. For the UK, see UK limited companies or UK LLPs. Other US types: C corporations, S corporations, LLCs.

How the company is taxed

A C corporation is a separate taxpayer. It files Form 1120, generally by the 15th day of the fourth month after its tax year ends, and pays federal income tax at a flat 21% on its taxable income, including capital gains. The IRS treats bitcoin as property, so the company has a gain or loss each time it sells, swaps or spends bitcoin, measured against the basis of the units disposed of. Shareholders pay tax again only when profits are paid out as dividends or when they sell their shares.

Capital losses are restricted. IRS Publication 542 says a corporation can deduct capital losses only up to its capital gains. Net capital losses are carried back three years and forward five years, and treated as short term in those years. A company that sells bitcoin at a loss in a year with no other capital gains may not get the benefit for some time, or at all.

Accumulated earnings tax

Section 531 imposes an extra 20% tax on a corporation's accumulated taxable income if it keeps earnings beyond the reasonable needs of the business to avoid tax for its shareholders. Publication 542 says a corporation can generally accumulate $250,000 without showing a reasonable need, or $150,000 for certain service businesses, such as health, law, accounting and consulting. Retaining profits to buy bitcoin is not, on its own, a reasonable business need, so a board that holds a growing reserve should document why the reserve serves the business. When working out the tax, Publication 542 says readily marketable securities are valued at net liquidation value; how a holding of bitcoin is valued for this purpose is a question for the accountant.

Putting bitcoin into the company

If founders contribute bitcoin to a corporation in exchange for stock, section 351 can make the exchange tax free when the transferors control the company afterwards. Section 351(e)(1) excludes transfers to an investment company. The statute lists the assets that count towards that test, such as money, stock, securities, derivatives, foreign currency and precious metals, plus any asset added by Treasury regulations; the list does not mention bitcoin or other digital assets. Treasury Regulation 1.351-1(c) adds that the exception applies only where the transfer results, directly or indirectly, in diversification of the transferors' interests. How these tests apply to a contribution that includes bitcoin is a question for the accountant. Treat a contribution of bitcoin as a transaction to plan with the accountant, not a formality.

A later purchase can also be funded from retained earnings, a further capital contribution or a shareholder loan. Those are different transactions, and the board minute and the books should match the one the board chose. See funding a company bitcoin purchase.

Accounting

Under ASU 2023-08, crypto assets in its scope are measured at fair value, with changes in net income, for fiscal years beginning after 15 December 2024. A calendar year company applies it from 2025. Book profit will therefore move with the price, while tax still follows disposals. That gap creates deferred tax entries, which the accountant should explain to the board.

Broker reporting and state tax

The 2026 instructions for Form 1099-DA list corporations as exempt recipients, so a broker may not send the company a form, though it may ask for a Form W-9. The company's own lot records are the basis for its return either way. State corporate taxes apply on top of federal tax and vary: California's Franchise Tax Board, for example, lists a rate of 8.84% for corporations other than banks and financials (page last updated 24 September 2025), and says every corporation incorporated, registered or doing business in California must pay the $800 minimum franchise tax, with an exception for a newly incorporated or qualified corporation's first taxable year (page last updated 16 December 2025).

Shareholders and QSBS

Founders sometimes ask whether holding bitcoin affects the qualified small business stock exclusion in section 1202. It can, because the exclusion depends on how the company uses its assets. See QSBS and company bitcoin.

Controls

Under Delaware section 141, the business is managed by or under the direction of the board, and directors may rely in good faith on reports from officers and experts. A written treasury policy, approved by the board, is the place to record limits, signers and the reasons for holding a reserve.

Common questions

Does a C corporation get a lower rate on long term gains?

No. A C corporation pays the same 21% federal rate on capital gains as on other income. Holding periods matter for character and carrybacks, not the rate.

Can a C corporation use a bitcoin loss against its trading profit?

Generally no. Capital losses can only offset capital gains, with a three year carryback and a five year carryforward.

Will the broker send the company a Form 1099-DA?

Often not. Corporations are exempt recipients in the 2026 instructions, so the company relies on its own records.

Sources

Primary sources only. Each link was checked on 9 November 2026. Rules change, so confirm the current version with your adviser.

1. IRSPublication 542, Corporations: 21% rate and capital losses
2. IRSAbout Form 1120, U.S. Corporation Income Tax Return
3. Cornell LII (unofficial copy of the US Code)26 U.S.C. 531: imposition of accumulated earnings tax
4. Cornell LII (unofficial copy of the US Code)26 U.S.C. 351: transfer to corporation controlled by transferor
5. FASBASU 2023-08, Intangibles: Goodwill and Other, Crypto Assets (Subtopic 350-60)
6. IRSInstructions for Form 1099-DA (2026): covered securities, basis reporting and exempt recipients
7. California Franchise Tax BoardBusiness tax rates
8. California Franchise Tax BoardCorporations: minimum franchise tax
9. Cornell LII (unofficial copy of the CFR)26 CFR 1.351-1(c): transfers to investment companies
10. Cornell LII (unofficial copy of the US Code)26 U.S.C. 1202: partial exclusion for gain from certain small business stock
11. Delaware CodeTitle 8, chapter 1, subchapter IV, section 141: board of directors, including reliance on reports in 141(e)
12. IRSDigital assets