On January 5, 2010, Jane purchased a bond paying interest at 6% for $30,000. On September 30, 2010, she gave the bond to Tim. The bond pays $1,800 interest on December 31. Jane and Tim are cash basis taxpayers. When Tim collects the interest in December 2010: a. Jane must include all of the interest in her gross income. b. Tim must include all of the interest in his gross income. c. Jane reports $450 of interest income in 2010, and Tim reports $1,350 of interest income in 2010. d. Jane reports $1,350 of interest income in 2010, and Tim reports $450 of interest income in 2010. e. None of the above is correct. 13. Nick, an attorney, owns a separate business (not real estate) in which he participates. He has one employee who works part-time in the business. a. If Nick participates for 500 hours and the employee participates for 520 hours during the year, Nick qualifies as a material participant. b. If Nick participates for 600 hours and the employee participates for 1,000 hours during the year, Nick qualifies as a material participant. c. If Nick participates for 120 hours and the employee participates for 120 hours during the year, Nick does not qualify as a material participant. d. If Nick participates for 95 hours and the employee participates for 5 hours during the year, Nick probably does not qualify as a material participant. e. None of the above