SPECIAL RULE FOR DETERMINING EARNED INCOME.

SEC. 406. SPECIAL RULE FOR DETERMINING EARNED INCOME.(a) In General.—In the case of a qualified individual, if the earned income of the taxpayer for the taxable year which includes August 25, 2005, is less than the earned income of the taxpayer for the preceding taxable year, the credits allowed under sections 24(d) and 32 of the Internal Revenue Code of 1986 may, at the election of the taxpayer, be determined by substituting—(1) such earned income for the preceding taxable year, for(2) such earned income for the taxable year which includes August 25, 2005.(b) Qualified Individual.—For purposes of this section, the term “qualified individual” means any individual whose principal place of abode on August 25, 2005, was located—(1) in the core disaster area, or(2) in the Hurricane Katrina disaster area (but outside the core disaster area) and such individual was displaced from such principal place of abode by reason of Hurricane Katrina.(c) Earned Income.—For purposes of this section, the term “earned income” has the meaning given such term under section 32(c) of such Code.(d) Special Rules.—(1) Application to joint returns.—For purposes of subsection (a), in the case of a joint return for a taxable year which includes August 25, 2005—(A) such subsection shall apply if either spouse is a qualified individual, and(B) the earned income of the taxpayer for the preceding taxable year shall be the sum of the earned income of each spouse for such preceding taxable year.(2) Uniform application of election.—Any election made under subsection (a) shall apply with respect to both section 24(d) and section 32 of such Code.(3) Errors treated as mathematical error.—For purposes of section 6213 of such Code, an incorrect use on a return of earned income pursuant to subsection (a) shall be treated as a mathematical or clerical error.(4) No effect on determination of gross income, etc.—Except as otherwise provided in this section, the Internal Revenue Code of 1986 shall be applied without regard to any substitution under subsection (a).119 STAT. 2029