3. Currently, Nick's brother Tommy owns an auto repair shop across town. Tommy owns the shop as a sole proprietorship. Nick has suggested that Tommy think about converting the shop to a corporation. Advantages for incorporating the repair shop into a C corporation include which of the following?

I. Allowing the flow-through of corporate profits to shareholders that could be taxed at each owner's marginal tax bracket.

II. Withdrawing accumulated profits at capital gain rates.

III. Providing tax-favored fringe benefits to employee shareholders.

IV. Changing the form of business with ease once a corporation has been formed.

A. II only

B. III only

C. I and III only

D. I and IV only