Bill Sharpe, owner of Sharper Knives, Inc is closing his business at the end of the current fiscal year. His sole asset, the knife-sharpening machine, is four years old. A depreciation table for the asset is shown below. Bill has agreed to sell the machine at the end of the year for $100,000. What is the impact on taxes from the sale of the machine? (Assume that Sharper Knives claimed a regular depreciation expense in the calculation of income taxes.) The tax rate is 35%. Round your answers to the nearest dollar.
Depreciation Table for Knife Sharpener
Year Basis Rate Depr Expense Acc Depr
1 $250000 14.29% 35,725 35,725
2 250000 24.49% 61,225 96,950
3 250000 17.49% 43,725 140,675
4 250000 12.49% 31,225 171,900
5 250000 8.93% 22,325 194,225
$25,165 additional taxes owing to IRS, $25,165 tax refund from IRS, $7,665 additional taxes owing to IRS, $27,335 additional taxes owing to IRS, $7,665 tax refund from IRS