Final answer:
Portfolio income, which includes interest, dividends, annuities, and royalties, is considered nonpassive income. Nonpassive income generally comes from direct efforts, participation, or active management, while passive income sources often involve earnings with little to no daily effort.
Step-by-step explanation:
The correct nonpassive income from the options provided is D) Portfolio income: Interest, dividends, annuities, and royalties. This type of income is considered active or nonpassive because it typically stems from investments where the investor is not engaged in the day-to-day management but still earns money from their investment.
Personal income is a macroeconomic term that refers to the earnings that households receive from all sources including wages, rental income, investments, and transfers like welfare payments. Disposable income, on the other hand, is the money that's left after taxes have been paid and is available for spending and saving. While different types of income are accounted for in both personal and disposable income, recognizing whether they are passive or nonpassive is important for taxation and investment strategy purposes.
Nonpassive or active income is often earned through direct effort and participation in an activity. It is contrasted with passive income, which is typically received without material participation, such as rental income or business activities in which the taxpayer does not actively participate.