Cattle, Inc. transferred part of its assets to a newly formed corporation, Herd, Inc. Herd, Inc. received assets with a basis of $40,000 and a fair market value of $90,000, but subject to a liability of $55,000. Cattle, Inc. received 100 percent of the stock in Herd, Inc. which Cattle, Inc. distributed to its shareholders in a spin-off that qualified under Code Section 355. Cattle, Inc. must recognize a gain of

a. $50,000.

b. $35,000.

c. $15,000.

d. $0.