Answer is C, requesting clarification as to how answer was reached.

In 2018, Mr. and Mrs. Drake redeem Series EE bonds and receive $14,000, consisting of $10,000 of principal and $4,000 of interest. Net qualifying educational expenses total $12,600. They are married filing jointly and have other AGI of $124,300. How much interest income must be included in their income in 2018 because of the redemption of savings bonds? a. $4,000 b. $2,520 c. $1,480 d. $ 400 e. None of the above