Choice "A" is correct. For Keogh plans, earned income is defined as net self-employment earnings reduced by the amount of the allowable Keogh deduction and ½ the self-employment tax.
Choice "c" is incorrect. For Keogh plans, earned income is also reduced by ½ the self-employment tax.
Choice "d" is incorrect. For Keogh plans, earned income is reduced by ½ the self-employment tax, not the entire tax.
Choice "b" is incorrect. For Keogh plans, earned income is reduced by ½ the self-employment tax and the full amount of the deductible Keogh contribution.
