John Dull, owner of Duller 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. John 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 Duller 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 $7,665 additional taxes owing to IRS $25,165 additional taxes owing to IRS $25,165 tax refund from IRS $7,665 tax refund from IRS $27,335 additional taxes owing to IRS