The only reason that might be surprising is that the "return *p;" statement refers to the value of an object at a point (textually) before its definition. But the lifetime of the object named "v" begins on entry to the innermost compound statement enclosing its definition -- in this case the body of "main".
Space for "v" is allocated on entry to "main". It's initialized to 1 when its definition is reached. The "return *p;" statement appears before the definition of "v" in the program source, but is executed after its definition was reached at run time, and within its lifetime.
It's important to remember that scope and lifetime are two different things. The scope of an identifier is the region of program text in which the identifier is visible; for "v" it extends from the definition to the closing "}". The lifetime of an object is the time span during execution in which it exists; for "v" it extends from the time when execution reaches the opening "{" to the time when execution reaches the closing "}". Formally, storage for "n" is allocated at the beginning of its lifetime and deallocated at the end of its lifetime. Compilers can and do optimize allocation and deallocation, as long as the visible behavior is consistent.
Aside: If "v" were a VLA (variable length array, introduced in C99, made optional in C11) its lifetime would begin when execution reaches its definition.