Parrott, Inc., a C corporation, is owned by Alfonso (60%) and Deanna (40%). Alfonso is the president, and Deanna is the vice president fo sales. All three are cash basis taxpayers. Parrott encounters working capital difficulties, so Alfonso loans the corporation $636,000, and Deanna loans the corporation $381,600. Each loan is supported by a 4% note that is due in five years, with interest payable annually. Determine the tax consequences to Parrott, Alfonso, and Deanna if the notes are classified as (a) debt and (b) equity. a. If the notes are classified as debt, Parrott, Inc., will of $ Alfonso will report of : and Deanna will report of 4 each year. b. If the notes are classified as equity, Parrott, Inc., will report Alfonso will report of 3 Deanna will report each year When the loan is repaid in five years, assuming adequate earnings and profits, Affonso will report of and Deanna will report of 5