Comment by dingaling
7 hours ago
"Traditional accounting depreciation would imply that purchasing local hardware is a terrible financial decision."
Depreciation is designed to _encourage_ purchasing of useful local tools, by incrementally matching fractions of the cost of the tool to the revenue it generates over its useful life. The fact that a graphics card might have a book value of $0 after five years of depreciation is a feature, not a bug.
Since the invention of corporation tax it has also had the benefit of offsetting tax over the same period, instead of just one big offset in the first year.
With all due respect, it sounds like you believe that when an asset is depreciated, it means the company gets to claim back the pro rata capex amount in tax. That's not remotely how it works. It's a business cost. Revenue minus costs equals profit, and that is taxable. Depreciation allows the business to declare lower profit (and thus pay less tax), but note that *the business is making less profit.* That's bad.
I'm not challenging the concept of depreciation. It's a necessary tax function. I'm explaining the business case for local LLMs is poor.