On April $30,$ Year $1,$ Tilton Products purchased machinery for $$120,000.$ The useful life of this machinery is estimated at $8$ years, with an $$10,000$ residual value. Tilton uses a calendar year$-$end for financial reporting.

In Year $7,$ Tilton Products sells this machinery for $$6,000.$ At the date of sale, the machinery had been depreciated by Tilton Products to its estimated residual value of $$10,000.$ This sale results in:

Multiple Choice

No gain or loss in either the financial statements or the income tax return.

A $$4,000$ loss in the financial statements; a $$4,000$ gain in the income tax return.

A $$4,000$ loss in both the company's financial statements and its income tax return.

A $$4,000$ loss in the financial statements, but no gain or loss in the income tax return.