Barbara owns 40% of the stock of Cassowary Corporation (a C corporation) and 40% of the stock of Emu Corporation (an S corporation). In the current year, each corporation has operating income of $120,000 (before income tax expense) and tax-exempt interest income of $8,000. Neither corporation pays any dividends during the year.

Complete the paragraph below that outlines how is this information will be reported by the corporations and Barbara for the current year.

Since C corporations are separatable tax entities, Cassowary Corporation will report the operating income and tax-exempt income. An S corporation is a tax reporting entity. Therefore, Barbara will report ordinary business income of $_______ and tax-exempt interest income of $______ on her individual return.