Kate owns all the stock in Warbler Corporation. Kate has a basis of $25,000 in the Warbler stock, which currently has a fair market value of $150,000. Warbler is merged into Wren Corporation. Kate receives Wren preferred stock worth $100,000 and common stock worth $50,000. Kate recognizes a gain of:
a. $125,000
b. $100,000
c. $50,000
d. $0