Both Albert and Elva Own 50% of the Stock of Eagle

Essay

Both Albert and Elva own 50% of the stock of Eagle, Inc. a C corporation). To cover what is perceived as temporary working capital needs, each shareholder loans Eagle $200,000 with an annual interest rate of 3% same as the Federal rate) and a maturity date of one year. The loan is made at the beginning of 2019.
a. What are the tax consequences to Albert, Elva, and Eagle if the loans are classified as debt?
b. What are the tax consequences to Albert, Elva, and Eagle if the loans are classified as equity?