Portfolio income includes all of the following EXCEPT:

Portfolio income typically refers to earnings derived from investments, and it primarily includes items such as interest, dividends, royalties, and capital gains. To understand why guaranteed payments received by a partner do not fall under portfolio income, it's helpful to clarify what guaranteed payments are.

Guaranteed payments are payments made to a partner for their service or for the use of their capital in a partnership, and they are considered ordinary income rather than income derived from investment activities. This income is reported on the partner's individual tax return as self-employment income and is subject to self-employment tax, which contrasts with the nature of portfolio income that is typically not subject to self-employment tax.

On the other hand, royalties that are not derived in the ordinary course of a trade or business, dividends from an S corporation, and interest from investments are all classified as portfolio income because they come from passive investments rather than active participation in a business. Each of these forms of income represents a return on capital invested or intangible assets, aligning with the definition of portfolio income.

Thus, the distinction lies in the nature of the income: guaranteed payments are compensation for services and investment, while the other options represent returns on passive investments.