James purchases a bond for 50,000. The bond pays 10% interest ($2,500) on both June 30 and December 31^st. James gifts the bond coupon (not the bond) to his nephew on September 30^th. How much is taxed to the nephew?

a. zero, because the nephew was gifted the coupon, not the bond.

b. $2,500 because the nephew only held the coupon for three months.

c. $5,000 because that is the amount of cash the nephew actually received.