If new machine is installed in the company, then the first cost of $3.750,000 is not written off in a single year, it is written off in parts over a period of time as depreciation of the machinery. However, apart from depreciation, the operational costs of $80,000 are also deducted from taxable income every year. With new technology $80,000 will be taken as operation cost for tax purpose and depreciation ,as per depreciation rules used by the company, of the equipment that is replacing manual process will also be deducted for tax purpose