Ward and June Are in the 28% Tax Bracket

Ward and June are in the 28% tax bracket.Included in their assets is a Dell Corporation bond with a face value of $10,000.The bond pays $1,000 per year in interest.Ward and June gift the bond to their son,Wally (age 19) ,on January 1,2013.Wally is in the 10% tax bracket.Wally's taxable income from the receipt of the bond and the bond interest in 2013 is

A) $ -0-
B) $ 1,000
C) $ 1,500
D) $10,000
E) $11,000