Ellie and Linda are equal owners in Otter Enterprises, a calendar year business. During the current year, Otter Enterprises has $320,000 of gross income and $210,000 of operating expenses. In addition, Otter has a long-term capital gain of $15,000 and makes distributions to Ellie and Linda of $25,000 each. What is the impact of this information on the taxable income of Otter, Ellie, and Linda

Ellie and Linda are equal owners in Otter Enterprises, a calendar year business. During the current year, Otter Enterprises has $320,000 of gross income and $210,000 of operating expenses. In addition, Otter has a long-term capital gain of $15,000 and makes distributions to Ellie and Linda of $25,000 each. What is the impact of this information on the taxable income of Otter, Ellie, and Linda if Otter is (a) a partnership, (b) an s corporation, and (c) a C corporation? If an amount is zero, enter "o". a. If Otter is a partnership, it will report net ordinary business income (loss) of $ 110,000 on its Form 1065. Ellie and Linda will receive a Schedule K-1 and each will report net profit of $ 55,000 and separately stated long-term capital gain of 15,000. The 20%/15%/0% preferential tax rate applies to only the long-term capital gain for Ellie and Linda. The partner's distributions do not affect Otter's taxable income and are not reported as income by Ellie and Linda. The partners' basis in the partnership is decreased by the distributions. b. If Otter is an s corporation, it will report net ordinary business income (loss) of $ will receive and each will report net profit of $ The 20%/15%/0% preferential tax rate applies to distributions Otter's taxable income and shareholder's basis in the corporation is by the distributions. on its Form 11205. Ellie and Linda and separately stated long-term capital gain of for Ellie and Linda. The corporation's reported as income by Ellie and Linda. The Feedback Check My Work Incorrect c. If Otter is a C corporation, it will report net ordinary business income (loss) of $ on its Form 1120. Ellie and Linda will receive . Each will report a net profit of s , separately stated long-term capital gain of and dividend income of $ The corporation's distributions Otter's taxable income and reported as income by Ellie and Linda