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ATMs are ubiquitous across the United States and around the world, providing convenient access to cash and various financial services. While they may seem like a mundane part of daily life, ATMs represent a significant investment opportunity that many have yet to explore. A growing market and the potential for stable, tax-free income make ATM investments an attractive option worth considering. The North American ATM services market reached a value of $6.8 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 6.5% through 2028
ATM users are typically charged fees for various services, such as cash withdrawals and balance inquiries. These fees, which average between $2 and $3, provide a consistent stream of revenue for ATM operators and investors. The stable transaction volume and the growing user base make ATMs a reliable source of passive income, even during economic downturns or other unforeseen circumstances.
There are two primary groups that own and operate ATMs:
Investing in ATMs offers several tax advantages that can contribute to building tax-free wealth. In this section, we will explore these benefits and discuss how they apply to ATM investments.
Investing in ATMs can provide significant tax benefits, as demonstrated by successful investor and tax strategist, Dave Zook. After facing a substantial tax bill, Zook researched various tax strategies and discovered the potential for tax-free wealth through government incentives. By investing in assets such as multi-family apartments, self-storage facilities, and ATMs, Zook was able to reduce his tax liability to nearly zero
Section 179 of the US tax code offers a powerful incentive for businesses to invest in new equipment, including ATMs. This provision allows businesses to write off the entire purchase price of qualifying assets in the year of purchase. Since 2017, businesses have also been able to use bonus depreciation on eligible assets in addition to Section 179 deductions. This can help offset capital gains and reinvest in new assets for further tax optimization.
Managing your tax liability is often about balancing the depreciation of your active income against the appreciation of your passive income. By investing in assets such as ATMs and properly structuring your investments, you have the potential to create a consistent stream of tax-free income. This can help you build tax-free wealth while maintaining financial momentum and minimizing your overall tax burden.
As with any investment, there are both advantages and potential drawbacks to consider when investing in ATMs. Some of the benefits include:
However, there are also potential risks and drawbacks, such as:
The most accessible way for individual investors to participate in ATM investments is through a fund. These funds typically consist of thousands of ATMs spread across various locations, offering instant diversification and reduced risk. When you invest in an ATM fund, you contribute capital without any operational duties or obligations, making it a fully passive investment. Most ATM funds have a predetermined investment period (e.g., seven years) and pay out monthly or quarterly distributions. By investing in a well-managed fund, you can potentially generate consistent cash flow and tax-free wealth.
As a team of CPAs dedicated to serving small businesses and individuals, we recognize the significance of exploring diverse wealth strategies and investment opportunities. Investing in ATMs presents a distinctive avenue for generating consistent cash flow and building tax-free wealth, complementing a well-rounded investment portfolio. At Anomaly CPA, our expertise lies in providing passive income strategies tailored to help you accomplish your financial objectives. To delve deeper into the realm of ATM investments and other tax optimization strategies, we encourage you to reach out to us today.
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