42 U.S.C. § 412 — Self-employment income credited to calendar years

(a) Taxable years prior to 1978: For figuring average monthly wage and quarters of coverage, self-employment income earned in a tax year that started before 1978 is credited: (1) if the tax year is a calendar year, equally across each of its four quarters; and (2) if the tax year is not a calendar year, equally across the quarter in which the tax year ends and up to three earlier quarters that overlap that tax year. (b) Taxable years after 1977: Except as subsection (c) provides, for figuring average indexed monthly earnings, average monthly wage, and quarters of coverage, self-employment income earned in a tax year that started after 1977 is: (1) credited to a single calendar year, if the tax year is that calendar year or begins and ends within it; and (2) otherwise allocated proportionately between the two calendar years the tax year overlaps, based on how many months of each calendar year fall completely within the tax year — the month the tax year ends in counts as completely within that tax year. (c) Proportional allocation: For someone who chooses a particular reporting option (described in section 411(a)(16)) for a tax year that does not line up with a single calendar year, that person's self-employment income is allocated between the two overlapping calendar years in the same proportion that the section 413(d) amounts for the quarters in each calendar year bear to the lower earnings limit set for that tax year under section 411(k)(1).