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 statements below regarding how this information will be reported by the corporations and Barbara for the current year.
Since C corporations are separate taxable 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 $________ .