Andrews, Badin, and Carr formed a partnership, ABC. During Year $2,$ the partnership sold some land that was held for investment and generated a long$-$term capital gain. How will this income be reported on the partners' individual tax returns?

Multiple choice question.

The income will retain its character and be reported as a long$-$term capital gain.

The income will be combined with the profit generated by the partnership and flow through to the partners as ordinary income.

The partnership will pay the tax due on the long$-$term capital gain rather than allocate it to the partners.

The income will be reported on the partners' individual tax returns only if they receive the proceeds from the sale.