At which exact statement does this program exhibit Undefined behavior as per the C++ standard?

Question

_{(I am aware of the fact that returning address/reference to a variable local to the function should be avoided and a program should never do this.)}

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Answer 1

I would say #3. Alone, #2 doesn't actually do anything even though the referenced object is already out of scope. This isn't really a standards-related issue because it is the result of two mistakes made in succession:

1. Returning a reference to an out-of-scope object followed by
2. Use of a reference.

Either in isolation has defined behavior. Whether the standard has anything to say regarding use of references to objects beyond the end of their lifetime is another matter.