John Budd is the sole stockholder of Ral Corp., an accrualbasis taxpayer engaged in wholesaling operations. Ral's retained earnings at January 1, 2017 amounts to $1,000,000. For the year ended December 31, 2017, Ral's book income, before federal income tax, is $300,000. Included in the computation of this $300,000 are the following:

Dividends received on 500 shares of stock of a taxable domestic corporation that had 1,000,000 shares of stock outstanding (Ral had no portfolio indebtedness).	$1,000
Loss on sale of investment in stock of unaffiliated corporation (this stock had been held for two years; Ral had no other capital gains or losses).	($5,000)
Keyman insurance premiums paid on Budd's life (Ral is the beneficiary of this policy).	$3,000
Group term insurance premiums paid on $10,000 lifeinsurance policies for each of Ral's four employees (the employees' spouses are the beneficiaries).	$4,000
Amortization of cost of acquiring a perpetual dealer's franchise (Ral pays $48,000 for this franchise on July 1, 2017, and is amortizing it over a 48month period).	$6,000
Contribution to a recognized, qualified charity (this contribution is authorized by Ral's Board of Directors in December 2017, to be paid on January 31, 2018).	75,000

On December 1, 2017, Ral receives advance rental of $27,000 from a tenant for a threeyear lease commencing January 1, 2018, to cover rents for the years 2018, 2019, and 2020. In conformity with GAAP, Ral does not include any part of this rental in its income statement for the year ended December 31, 2017. In computing taxable income for 2017, Ral should deduct a capital loss of

$0

$2,500

$3,000

$5,000