When given the following problem:
A) Bill took the money. B) That shows his character. Turn clause A into a nominal clause or phrase and make it the subject of b.
I came up with three grammatical possibilities:
1) That Bill took the money shows his character.
2) For Bill to take the money shows his character.
3) Bill's taking the money shows his character.
None sit well with me. One and two don't seem to work just 'cause I wouldn't say either. Number three, the one that turns clause A into a gerund phrase, is better except for it's possessive subject in bold.
Does the subject of a gerund phrase have to be in the possessive in standard English?
"Bill taking the money shows his character" sounds more natural to me.