AMC Entertainment Holdings (NYSE: AMC) is doing everything in its power to be accessible to its millions of largely young retail investors. CEO Adam Aron has beefed up the multiplex operator’s offerings with recorded concerts, live NFL games, and possibly arcade game events.
Last month, AMC announced that it would accept Bitcoin (CRYPTO: BTC) in payment for cinema tickets or concession stand purchases before the end of the year. Last week, Aron tweeted that he would also accept Ethereum (CRYPTO: ETH), Litecoin (CRYPTO: LTC), and Bitcoin Cash (CRYPTO: BCH) when its Bitcoin feature goes into effect later this year. He polled his subscribers this week to see if Dogecoin (CRYPTO: DOGE) should be a fifth crypto option for AMC purchases. Spoiler alert: Aron must now see how he can make Dogecoin possible as a payment platform.
A stock of memes enveloping themselves in crypto buzzwords might seem overkill, but that’s where we are now. I’m an AMC fan who thinks outside the box office, and I’ve been a cryptocurrency investor for the past year as well. I can see why the news is making waves, but if you’re smart you probably won’t pay for your AMC purchases with cryptocurrency. Let’s go over some of the reasons why you should resist the call of wild crypto to buy your next morning ticket or pot of popcorn.
1. Crypto purchases are taxable events
As an investment, cryptocurrency follows the same tax rules as stocks, real estate, and other properties. When you sell – and that’s exactly what you do when you trade Litecoin to take your family to see Eternals in November – this is a taxable event. If the crypto you sell to buy the AMC movie ticket is worth more than what you already paid for it, you have a capital gain in your hands. If you sell at a loss, this is a capital loss that can be used to offset gains elsewhere for the year.
Are you sure you want to keep meticulous transaction records so you don’t run into the IRS for the novelty of buying an $ 8 cup of soda with Dogecoin? You could very well take a chance and not report the transaction on your 1040 in the spring of next year, assuming the IRS wouldn’t audit a small crypto investor. Good luck with that.
#AMC will accept Bitcoin by the end of the year.
IRS audit meeting around 2024:
IRS: Do you remember the popcorn you bought for Matrix 4?
You: Uh, is that why you signaled my return in 2021?
IRS: tax evader?
You: No. AMC charged me sales tax.
IRS: Crypto Capital Gains Tax, kid!
– Rick Munarriz (@Market) August 10, 2021
2. You can earn crypto on your purchase instead
Moving crypto is not a free experience. It remains to be seen whether AMC will cover the transaction costs associated with trading Ethereum for Eternals tickets later this year. Coinbase (NASDAQ: COIN) – the main crypto trading exchange – charges a transaction fee of 2.49% on all cryptocurrencies using its brand Visa debit card. The only free currency you can use with the Coinbase card is his 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 they charge a crypto surcharge here.
It’s easy to avoid all of this mess by just using your Visa Coinbase card to earn crypto instead of burning it. As long as you make sure that your Coinbase account is loaded with enough USD coins 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 coins 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 have always had the power to apply for the Coinbase card if you have an active account on the trading platform.
3. Let your investments run
If you don’t have an encrypted credit card with you, simply pay AMC in cash, plastic, or any digital payment platform of your choice. If you are a true cryptocurrency investor, you buy tokens and stablecoins for their appreciation power. You wouldn’t buy movie tickets with AMC shares if Aron let you. Law? Why would you want to pay for Bitcoin Cash that you hope will be worth more in the future?
Remember the story of 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 now is the perfect time for your movie trip to coincide with a crypto transaction you were about to make.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.