Which of the following describes partnership income?

Partnership income refers to the earnings generated by a partnership, and it is important to understand how it is taxed. When a partnership earns income, that income is not directly taxed at the partnership level. Instead, it "passes through" to the individual partners who report their share of the partnership's income on their personal tax returns. This means that the taxation occurs at the individual partner level, making option A the correct choice.

This framework allows partners to pay taxes based on their individual tax situations rather than at the partnership level, which can lead to different tax outcomes depending on each partner's financial circumstances and tax strategies.

The other options suggest misunderstandings about how partnership income is handled. For instance, income is generally taxable in the year it is earned, regardless of whether it has been distributed to the partners. Additionally, partnership income can be sourced from both domestic and foreign operations, highlighting the incorrectness of suggesting it is limited to U.S. sources or cannot come from foreign sources.