It depends on what "spent $1,000 on servers" means If you bought (and own) servers, you must depreciate and amortize them. These are capital expenditures, aka

It depends on what "spent $1,000 on servers" means If you bought (and own) servers, you must depreciate and amortize them. These are capital expenditures, aka capex If you rented servers (e.g. AWS, GCP), you deduct the entire cost when it is incurred (or realized, depending on the details). This is an operational expense, aka opex