What comprises "earned income" in a tax return?

Earned income refers specifically to income derived from active participation in work or services rendered. This encompasses wages, salaries, tips, and income earned through self-employment. The key aspect of earned income is that it requires the taxpayer to engage in work, whether as an employee or a business owner.

In contrast, other types of income listed in the options, such as income from real estate transactions, lottery winnings, and family gifts, do not involve active work or services. Real estate income could be categorized as passive income, lottery winnings are considered unearned income, and gifts are not taxable as income, making only option C accurately represent what earned income is on a tax return.