Gold Company was experiencing financial difficulties but was not bankrupt or insolvent. National Bank, which held a mortgage on other real estate owned by Gold, reduced the principal from $110,000 to $85,000. The bank had made the loan to Gold when it purchased the real estate from Silver, Inc. Pink, Inc., the holder of a mortgage on Golds building, agreed to accept $40,000 in full payment of the $55,000 due. Pink had sold the building to Gold for $150,000 that was to be paid in installments over eight years. As a result of the above, Gold must:

a. Include $40,000 in gross income.

b. Reduce the basis in its assets by $40,000.

c. Include $25,000 in gross income and reduce its basis in its assets by $15,000.

d. Include $15,000 in gross income and reduce its basis in the building by $25,000.

e. None of these.