income reporting If the earned income of a taxpayer claimed on a return for purposes of this section is not substantiated by statements or returns under sections 6051, 6052, 6041(a), or 6050W with respect to such taxpayer, the Secretary may require such taxpayer to provide books and records to substantiate such income, including for the purpose of preventing fraud. . (b) Exclusion of unsubstantiated amount from earned income Section 32(c)(2) is amended by adding at the end the following new subparagraph: (C) Exclusion In the case of a taxpayer with respect to which there is an inconsistency described in subsection (n) who fails to substantiate such inconsistency to the satisfaction of the Secretary, the term earned income shall not include amounts to the extent of such inconsistency. . (c) Effective date The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act. C Simplification and reform of education incentives 1201. American opportunity tax credit (a) In general Section 25A is amended to read as follows: 25A. American opportunity tax credit (a) In general In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of— (1) 100 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to any eligible student for whom an election is in effect under this section for such taxable year during any academic period beginning in such taxable year) as does not exceed $2,000, plus (2) 25 percent of so much of such expenses so paid as exceeds the dollar amount in effect under paragraph (1) but does not exceed twice such dollar amount. (b) Portion of credit refundable 40 percent of the credit allowable under subsection (a)(1) (determined without regard to this subsection and section 26(a) and after application of all other provisions of this section) shall be treated as a credit allowable under