Bill Sharpe, Owner of Sharper Knives Inc A)$7,665 Additional Taxes Owing to IRS
B)$7,665 Tax Refund from Business

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
$$\begin{array} { | c | c | c | c | c | } \hline \text { Year } & \text { Basis } & \text { Rate } & \begin{array} { c } \text { Depreciation } \\\text { Expense }\end{array} & \begin{array} { c } \text { Accumulated } \\\text { Depreciation }\end{array} \\\hline 1 & \$ 250,000 & 14,29 \% & \$ 35,725 & \$ 35,725 \\\hline 2 & \$ 250,000 & 24,49 \% & \$ 61,225 & \$ 96,950 \\\hline 3 & \$ 250,000 & 17.49 \% & \$ 43,725 & \$ 140,675 \\\hline 4 & \$ 250,000 & 12,49 \% & \$ 31,225 & \$ 171,900 \\\hline 5 & \$ 250,000 & 8.93 \% & \$ 22,325 & \$ 194,225 \\\hline\end{array}$$

A) $7,665 additional taxes owing to IRS
B) $7,665 tax refund from IRS
C) $25,165 additional taxes owing to IRS
D) $25,165 tax refund from IRS
E) $27,335 additional taxes owing to IRS