Always Right,
I know that we don't write a check for depreciation. We do put it on our books and have to come up with that much income, or else we are loosing money.
Example, last year we made $10,000 profit, and we had $50,000 cash saved up and decided we needed a new truck. This year, we made the same money, but have to show $0 profit since we had to depreciate $10,000 on the truck.
I'm guessing here, but I seem to remember that we "pay" somewhere near $1,000,000 in depreciation each year. That is with a total budget of around $7,000,000.
But even without the IRS, accountants will still depreciate. Unless you are a self-owned business, you need to track costs so you can share profits. If you just expensed out the $50,000 car in year one, you would not have an accurate picture of how your business is doing. Some depreciation is more of a tax trick, but mostly it is good accounting practice so you know the value of your business.