If C corporations retain their after$-$tax earnings $($for reasonable business purposes$),$ when will their individual shareholders be taxed on the retained earnings?

Multiple Choice

Shareholders will be taxed when they sell their shares at a gain.

Shareholders will be taxed in the year they elect to be taxed on undistributed retained earnings.

Shareholders will be taxed on undistributed retained earnings in the year the corporation files its tax return.

None of the choices is correct.