LO.5 Amber holds a 20% interest in a business to which she contributed $100,000 as part of the initial ownership group. During the life of the business, the following have occurred.

l $200,000 cumulative losses, first three tax years.

l $150,000 operating profit in the fourth tax year.

l $75,000 distribution to owners at the end of the third tax year.

l $60,000 payment to redeem 25% of Amber’s ownership interest at the end of the fourth year. No other ownership redemptions have occurred.

Determine the tax consequences to Amber if the entity is organized as:

a. A partnership.

b. An S corporation.

c. A C corporation.