Kee Holding Corp. has eighty unrelated equal stockholders. For the year ended December 31, 2007, Kee’s income comprised the following:

Net rental income

$ 1,000

Commissions earned on sales of franchises

3,000

Dividends from taxable domestic corporations

90,000

Deductible expenses for 2007 totaled $10,000. Kee paid no dividends for the past three years. Kee’s liability for personal holding company tax for 2007 will be based on

  1. $12,000
  2. $11,000
  3. $ 9,000
  4. $0