On January 5, 2018, Tim Purchased a Bond Paying Interest

Multiple Choice

On January 5, 2018, Tim purchased a bond paying interest at 6% for $30,000. On March 31, 2018, he gave the bond to Jane. The bond pays $1,800 interest on December 31. Tim and Jane are cash basis taxpayers. When Jane collects the interest in December 2018:

A) Tim must include all of the interest in his gross income.
B) Jane must report $1,800 gross income for 2018.
C) Jane reports $1,350 of interest income in 2018, and Tim reports $450 of interest income in 2018.
D) Jane reports $450 of interest income in 2018, and Tim reports $1,350 of interest income in 2018.
E) None of these is correct.