Which of the following describes portfolio income and losses?

Portfolio income refers specifically to earnings that are generated from investments rather than from regular business operations or active income derived from work. This category encompasses income such as dividends received from stock investments, interest earned from savings accounts or bonds, and capital gains realized from the sale of investment assets.

The correct answer emphasizes the nature of portfolio income as being a result of financial investments rather than wages, business profits, or payments for services rendered. Understanding this distinction is crucial for tax purposes, as portfolio income can have different tax treatment compared to earned income and self-employment income.

In contrast, income derived from business operations relates to profits generated by actively running a business, while wages and salaries stem from employment, and income from providing professional services is categorized as earned income. Recognizing these differences can clarify how various types of income are handled under tax regulations.