depreciation

My understanding of why you end up paying tax on money you re-invest into the business is depreciation.

(factoring depreciation, < $0.28/mile), which means his net during the year is something like $26k to $34k.

Operating profits take a charge for depreciation of capital assets over the (tax) economic life of the asset.

Assuming it's a capital good that depreciates to near zero (and it's more complicated than that) the depreciation is written off against revenue as a cost, just like payroll.

If you include depreciation, you should only count the transaction costs of a new car (taxes, fees).

Sure, it's more expensive in gas money, but when you factor in the reduced depreciation that's peanuts.

Well, a lot of computers cost about $1000 and the depreciation schedule for computers is 5 years.

The idea behind depreciation is that you write off the object as it loses value.

And don't spend arms and legs on new furniture or other generic, high-depreciation items, get gently used kit from liquidators and recyclers.

To those of who you are against including the depreciation cost of the car.

My guess is they could charge around 60$ a month and make significant profit while paying down the outstanding loans faster than depreciation.

You can't count both depreciation and the cost of a new car.

To put it simply, in many places the "open" space is subject to lower real estate taxes, and depreciation on the partitions etc.

(Exact schedule of depreciation is facts and circumstances dependent.) But it's not like they're making a profit just because the servers are "free".

I imagine if you did it as a "small business" you could subtract all of your expenses first and even subtract depreciation of your capital (depreciation of your car), then do your taxes on the far smaller amount rather than on $50 per hour gross income.

So, because they don't have to expense any depreciation/(expense for capital expenditure in some form) at the AWS level, the "operating profit" at AWS is artificially high and would be negative if it was properly showing the economics of that business.