Lenny is the sole shareholder of an S corporation. Each year, he draws a salary and receives a distribution of profits from the corporation. Which of the following statements is TRUE?

Lenny's share of the profits will not be subject to social security or medicare taxes.

Lenny's salary will be treated as self$-$employment income and must be reported on Schedule C$.$

Lenny will pay income taxes only on the portion of the profits that he actually distributes to himself.

Lenny may determine his salary by selecting the amount that provides him the greatest tax benefit, regardless of the market rate for the services he provides.