Tim, a Real Estate Investor, Ken, a Dealer in Securities

Tim, a real estate investor, Ken, a dealer in securities, and Hardware, Inc., a retail lumber store, form a partnership called HKT, LP.HKT is in the home-building business.Tim recently purchased his interest in HKT, while the other partners purchased their interests several years ago.During X3, HKT reports a $12,000 gain from the sale of a stock in a wholesale lumber company it purchased in X1 for investment purposes.Which of the following statements best represents how their portion of the gain should be reported to the partner?

A) Tim-Short-term capital gain.
B) Ken-Ordinary Income.
C) Hardware, Inc.-Long-term capital gain.
D) All of the choices accurately report the gain to the partner.
E) None of the choices accurately report the gain to the partner.