Final answer:
Leo is generating capital gains, which are profits earned from the sale of assets like the jet skis he bought, if he sells them for more than the purchase price.
Step-by-step explanation:
When Leo bought jet skis and now wants to sell them for profit, this is an example of capital gains income. Capital gains are the profits earned from the sale of assets such as stocks, bonds, or property that have increased in value over time. If he sells them for more than he bought them for, the profit he makes is considered a capital gain. This is different from earned income, which is money earned through employment or active work. Similarly, hourly income is also generally associated with active work, not the sale of assets. Passive income typically refers to earnings from rental property, limited partnerships, or other enterprises in which a person is not actively involved.