Choice "D" is correct. Adjusted gross income is gross income plus or minus certain other amounts. Half of the $8,000 self-employment tax is an adjustment for AGI, as is the $6,000 self-employed health insurance, the $5,000 alimony, and the $2,000 contribution to a traditional IRA. All of these amounts (total of $17,000) are subtracted from the $57,000 gross income to arrive at AGI. The AGI is thus $40,000.
Choice "a" is incorrect. The $55,000 is the $57,000 gross income subtracting only the $2,000 IRA contribution.
Choice "c" is incorrect. The $50,000 is the $57,000 subtracting only the $5,000 alimony and the $2,000 IRA contribution.
Choice "b" is incorrect. The $46,000 is the $57,000 subtracting everything but the $6,000 self-employed health insurance.