Problem 15-20 (LO. 1) Ellie and Linda are equal owners in Otter Enterprises, a calendar year business. During the current year, 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 effects of this information on the taxable income of Otter, Ellie, and Linda? If an amount is zero, enter "O". Otter Enterprises 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-1and each will report net profit of55,000 and separately stated long-term capital gain of 15,000 X . The 20%/15%/0% preferential tax rate applies to only the long-term capital gain for Elie and Linda. The partner's distributions do not affectOtter's taxable income and are x 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 on its Form 1120S 110,000 Elle and Linda will receive a Schedule S-1 x and each will report net profit of s 5 ong-term capital gain of 55,000 and separately stated . The 20%/15%/0% preferential tax rate applies to only the long-term capital gain 7,500 for Ellie and Linda. The corporation's distributions do not affect Otter's taxable income and are X reported as income by Ellie and Linda. The shareholder's basis in the corporation is decreasedby the distributions. c. If Otter is a C corporation, it will report net ordinary business income (loss) of 125,000 on its Form 1120. Ellie c. If Otter is a C corporation, it will report net ordinary business income (loss) of s125,000on its Form 1120. Ellie o and separately stated and Linda will receive a Schedule M-3 X and each will report net profit of long-term capital gain of 36,000 The 0 | V as well as dividend income of $1 25,000 | VThe corporation's distributions decrease X Otter's taxable income and are reported as income by Ellie and Linda