AMC Entertainment Holdings (AMC -9.35%) is doing everything it can to be relatable to its millions of largely young retail investors. CEO Adam Aron has been beefing up the multiplex operator's offerings with recorded concerts, live NFL games, and eventually e-gaming events.
Last month AMC announced that it would be accepting Bitcoin (BTC -1.15%) as payment for movie tickets or concession stand purchases before the end of the year. Last week Aron tweeted that it will also accept Ethereum (ETH -1.81%), Litecoin (LTC -1.63%), and Bitcoin Cash (BCH -1.80%) when its Bitcoin functionality kicks in later this year. He polled his followers this week to see if Dogecoin (DOGE -3.97%) should be a fifth crypto option for AMC purchases. Spoiler alert: Aron now has to see how he can make Dogecoin possible as a payment platform.
A meme stock wrapping itself in crypto buzzwords may seem like overkill, but that's just where we find ourselves now. I'm a fan of AMC thinking outside of the box office, and I've also been a cryptocurrency investor since last year. I can see why the news is making waves, but if you're smart you probably won't be paying for your AMC purchases with cryptocurrency. Let's go over some of the reasons why you should resist the call of the crypto wild to buy your next matinee ticket or tub of popcorn.
1. Crypto purchases are taxable events
As an investment, cryptocurrency follows the same taxation rules as stocks, real estate, and other properties. When you sell -- and that's exactly what you're doing when you swap some Litecoin to take your family to see Eternals in November -- it's a taxable event. If the crypto you're selling to purchase the AMC movie ticket is worth more than what you previously paid for it, you have a capital gain on your hands. If you're selling at a loss, it's a capital loss that can be used to offset gains elsewhere for the year.
Do you really want to keep meticulous transaction records just so you don't run afoul of the IRS for the novelty of buying an $8 cup of soda with Dogecoin? You may very well take a chance and not report the transaction on your 1040 in the springtime of next year, assuming that the IRS wouldn't audit a small crypto investor. Good luck with that.
#AMC will accept Bitcoin by the end of the year.— Rick Munarriz (@Market) August 10, 2021
IRS audit meeting circa 2024:
IRS: Remember that popcorn you bought for Matrix 4?
You: Uh, is that why you flagged my 2021 return?
IRS: Tax evader?
You: No. AMC charged me sales tax.
IRS: Capital gains tax on the crypto, kid!
2. You can earn crypto on your purchase instead
Moving crypto around isn't a cost-free experience. It remains to be seen if AMC will cover the transaction fees associated with trading some Ethereum for Eternals tickets later this year. Coinbase (COIN -1.32%) -- the leading crypto trading exchange -- charges a 2.49% transaction fee on all cryptocurrency using its branded Visa debit card. The only fee-free currency you can use with the Coinbase card is its own USD Coin. Using any of the four -- or potentially five -- types of crypto that AMC is talking about would cost more than just paying in fiat. We'll see if AMC is willing to subsidize the transaction or if it will charge a crypto surcharge here.
It's easy to avoid all of this mess by just using your Coinbase Visa card to earn crypto instead of burning it. As long as you make sure your Coinbase account is loaded with enough USD Coin to cover your purchase, you can pay with the Coinbase card just as you would with any other Visa credit or debit card. Buying or selling USD Coin is free on Coinbase. And for every $1 spent on the card you can choose between having 1% back in Bitcoin or 4% back in Stellar Lumens. Oh, and you don't have to wait for AMC on this. You've had the power all along by applying for the Coinbase card if you have an active account on the trading platform.
3. Let your investments run
If you don't have a crypto-earning credit card on you, just pay AMC in cash, plastic, or your digital payment platform of choice. If you're a true cryptocurrency investor you're buying tokens and stablecoins for their power to appreciate. You wouldn't buy movie tickets with AMC stock if Aron let you. Right? Why would you pay for Bitcoin Cash that you hope will be worth more in the future?
Remember the story about the guy who paid 10,000 bitcoins for a pair of pizzas a dozen years ago? Don't be that guy. Keep your crypto active -- unless it just happens to be perfect timing that your movie outing coincides with a crypto transaction you were about to make.