Final answer:
Tips received are considered taxable income. Insurance benefits and inheritances are typically non-taxable, and scholarship income is non-taxable when applied to tuition and educational expenses.
Step-by-step explanation:
From the options provided, the taxable income is D) Tips received. Tax treatment for different types of income can vary significantly. Insurance benefits are often not taxed unless they represent a reimbursement of expenses that were previously deducted from your taxes. Inheritances are generally not considered taxable income for the recipients; instead, the estate might pay any tax due. Scholarship income is typically not taxed if it is used for tuition and educational expenses. However, if the scholarship funds are used for other expenses, that portion might be taxable. On the other hand, tips received are considered earned income and are subject to income taxes. Anyone receiving tips as part of their employment have to report this income to the IRS and it will affect your income through federal and, where applicable, state income taxes.