On January 5, 2014, Tim Purchased a Bond Paying Interest

On January 5, 2014, Tim purchased a bond paying interest at 6% for $30,000. On March 31, 2014, 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 2014:

A) Tim must include all of the interest in his gross income.
B) Jane must report $1,800 gross income for 2014.
C) Jane reports $1,350 of interest income in 2014, and Tim reports $450 of interest income in 2014.
D) Jane reports $450 of interest income in 2014, and Tim reports $1,350 of interest income in 2014.
E) None of the above is correct.