Leave dependents' casualty losses off Arkansas returns and limit Puerto Rico's casualty deduction to its two statutory items

changelog.d/fix-ar-pr-casualty-loss.fixed.md

@@ -0,0 +1 @@
+Leave dependents' casualty losses off the filer's Arkansas return, and limit the Puerto Rico casualty loss deductions to the principal residence and capped household personal property under P.R. Code Section 1033.15(a)(10), with new Puerto Rico inputs.

policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/personal_property_cap.yaml

@@ -0,0 +1,38 @@
+# SEPARATE means Puerto Rico filing status 3: spouses living together at the
+# end of the year who file separately. A married person not living with the
+# spouse files as an individual taxpayer under the $5,000 cap.
+description: Puerto Rico limits the deduction for casualty losses of automobiles, furniture and other household goods to this amount, based on filing status.
+metadata:
+  propagate_metadata_to_children: true
+  unit: currency-USD
+  period: year
+  label: Puerto Rico personal property casualty loss deduction cap
+  breakdown:
+    - filing_status
+  breakdown_label:
+    - Filing status
+  reference:
+    - title: P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(B)(i) (13 L.P.R.A. § 30135), as enacted by Act 1-2011
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/0001-2011.pdf#page=189
+    - title: P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(B)(i), OGP English compilation (Rev. June 18, 2026)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=167
+    - title: Código de Rentas Internas de Puerto Rico de 2011, Sección 1033.15(a)(10)(B)(i), OGP compilation (Rev. 28 de mayo de 2026)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/C%C3%B3digos/1-2011/1-2011.pdf#page=182
+    - title: Act 1-2011, Section 6100.04(a)(1) (Subtitle A applies to taxable years starting after December 31, 2010)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/0001-2011.pdf#page=1313
+    - title: 2023 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 5
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2023.pdf#page=26
+    - title: 2024 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 5
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2024.pdf#page=26
+    - title: 2025 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 5
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2025.pdf#page=26
+SINGLE:
+  2011-01-01: 5_000
+JOINT:
+  2011-01-01: 5_000
+SEPARATE:
+  2011-01-01: 2_500
+HEAD_OF_HOUSEHOLD:
+  2011-01-01: 5_000
+SURVIVING_SPOUSE:
+  2011-01-01: 5_000

policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/separate_percentage.yaml

@@ -1,14 +1,29 @@
-description: Puerto Rico deducts this percentage of casualty loss for separate filers.
+# SEPARATE means Puerto Rico filing status 3: spouses living together at the
+# end of the year who file separately. A married person not living with the
+# spouse files as an individual taxpayer and claims the whole loss.
+description: Puerto Rico allows each spouse filing a separate return this share of the couple's casualty losses on the principal residence and on household personal property.
+values:
+  2011-01-01: 0.5
 metadata:
   unit: /1
   period: year
-  label: Puerto Rico casualty loss deduction separate filing status percentage  
+  label: Puerto Rico casualty loss deduction separate filing share
   reference:
-    - title: P.R. Laws tit. 13, § 30135 (10)(A)(ii)
-      href: https://law.justia.com/codes/puerto-rico/title-thirteen/subtitle-17/part-ii/chapter-1005/subchapter-c/30135/
-    - title: Gov. of Puerto Rico Individual Income Tax Return Form 482.0 4 
-      href: https://hacienda.pr.gov/sites/default/files/individuals_2024_rev._jul_12_24_9-30-24_informative.pdf#page=4
-    - title:  Individual Income Tax Return Instructions Booklet 2023
+    - title: P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(A)(ii) (13 L.P.R.A. § 30135), as enacted by Act 1-2011
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/0001-2011.pdf#page=188
+    - title: P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(A)(ii), OGP English compilation (Rev. June 18, 2026)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=167
+    - title: P.R. Internal Revenue Code of 2011, Section 1021.03(a)(4) (50% attribution of Section 1033.15(a)(10) deductions), OGP English compilation (Rev. June 18, 2026)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=40
+    - title: P.R. Internal Revenue Code of 2011, Section 1061.01(b)(2)(B) (separate returns follow Section 1021.03(a)(1)-(6)), OGP English compilation (Rev. June 18, 2026)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=321
+    - title: Act 1-2011, Section 6100.04(a)(1) (Subtitle A applies to taxable years starting after December 31, 2010)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/0001-2011.pdf#page=1313
+    - title: 2023 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 2
       href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2023.pdf#page=24
-values:
-  2023-01-01: 0.5
+    - title: 2024 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 2
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2024.pdf#page=24
+    - title: 2025 Individual Income Tax Return Instructions Booklet, filing status 3 (married filing separately)
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2025.pdf#page=14
+    - title: 2025 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 2
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2025.pdf#page=24

policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/sources.yaml

@@ -2,6 +2,7 @@ description: Puerto Rico deductions from taxable income.
 values:
   2023-01-01:
     - pr_casualty_loss_deduction
+    - pr_personal_property_casualty_loss_deduction
     - pr_charitable_deduction
     - pr_medical_expense_deduction
     - pr_mortgage_deduction

policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_indiv.yaml

@@ -55,7 +55,7 @@
   output:
     ar_casualty_loss_deduction_indiv: 0
 
-- name: 2025, losses of both spouses are treated as one casualty
+- name: 2025, losses of both spouses from one casualty share one Form AR4684
   # 12,000 + 8,000 - 100 - 10% * (30,000 + 20,000) = 14,900
   period: 2025
   input:
@@ -75,3 +75,63 @@
         state_code: AR
   output:
     ar_casualty_loss_deduction_indiv: 14_900
+
+- name: 2025, a dependent's loss is not deductible on the filer's return
+  # 26 U.S.C. § 165(h), as adopted by Ark. Code § 26-51-424(b), allows the
+  # loss of the individual who sustained it, on that individual's return.
+  period: 2025
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        is_tax_unit_dependent: false
+        ar_agi_indiv: 30_000
+      person2:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: false
+        ar_agi_indiv: 20_000
+      person3:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: true
+        casualty_loss: 20_000
+        ar_agi_indiv: 0
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+    households:
+      household:
+        members: [person1, person2, person3]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_indiv: 0
+
+- name: 2025, spouses' losses are pooled and a dependent's loss is left out
+  # 12,000 + 8,000 - 100 - 10% * (30,000 + 20,000) = 14,900; the dependent's
+  # 5,000 is excluded.
+  period: 2025
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        is_tax_unit_dependent: false
+        casualty_loss: 12_000
+        ar_agi_indiv: 30_000
+      person2:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: false
+        casualty_loss: 8_000
+        ar_agi_indiv: 20_000
+      person3:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: true
+        casualty_loss: 5_000
+        ar_agi_indiv: 0
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+    households:
+      household:
+        members: [person1, person2, person3]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_indiv: 14_900

policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_joint.yaml

@@ -86,3 +86,53 @@
     state_code: AR
   output:
     ar_casualty_loss_deduction_joint: 14_500
+
+- name: 2025, a dependent's loss is not deductible on the filer's return
+  # 26 U.S.C. § 165(h), as adopted by Ark. Code § 26-51-424(b), allows the
+  # loss of the individual who sustained it, on that individual's return.
+  period: 2025
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        is_tax_unit_dependent: false
+        ar_agi_joint: 50_000
+      person2:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: true
+        casualty_loss: 20_000
+        ar_agi_joint: 0
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_joint: 0
+
+- name: 2025, only the filer's own loss counts when a dependent also has one
+  # 12,000 - 100 - 10% * 50,000 = 6,900; the dependent's 3,000 is excluded.
+  period: 2025
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        is_tax_unit_dependent: false
+        casualty_loss: 12_000
+        ar_agi_joint: 50_000
+      person2:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: true
+        casualty_loss: 3_000
+        ar_agi_joint: 0
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_joint: 6_900

policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_itemized_deductions_indiv.yaml

@@ -80,3 +80,31 @@
         state_code: AR 
   output:
     ar_itemized_deductions_indiv: [590, 410]
+
+- name: A spouse's casualty loss is split by AGI share, not by owner
+  # Only the spouse had a loss. Form AR3 line 18:
+  # 20,100 - 100 - 10% * (60,000 + 40,000) = 10,000.
+  # AR3 lines 31-35 split the line 30 total by AGI share:
+  # 60% * 10,000 = 6,000 and 40% * 10,000 = 4,000.
+  period: 2025
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        is_tax_unit_dependent: false
+        ar_agi_indiv: 60_000
+      person2:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: false
+        casualty_loss: 20_100
+        ar_agi_indiv: 40_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_indiv: 10_000
+    ar_itemized_deductions_indiv: [6_000, 4_000]

policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_casualty_loss_deduction.yaml

@@ -0,0 +1,92 @@
+- name: Case 1, separate filer claims half of the principal residence loss.
+  # Section 1033.15(a)(10)(A)(ii): 50% * 20,000 = 10,000
+  period: 2024
+  input:
+    pr_principal_residence_casualty_loss: 20_000
+    filing_status: SEPARATE
+    state_code: PR
+  output:
+    pr_casualty_loss_deduction: 10_000
+
+- name: Case 2, single filer deducts the whole principal residence loss.
+  period: 2024
+  input:
+    pr_principal_residence_casualty_loss: 3_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_casualty_loss_deduction: 3_000
+
+- name: Case 3, a generic casualty or theft loss does not qualify.
+  # casualty_loss holds any personal casualty or theft loss (federal Form
+  # 4684). Puerto Rico allows only the principal residence loss, entered as
+  # pr_principal_residence_casualty_loss.
+  period: 2024
+  input:
+    casualty_loss: 20_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_casualty_loss_deduction: 0
+
+- name: Case 4, a household goods loss is not a principal residence loss.
+  period: 2025
+  input:
+    pr_personal_property_casualty_loss: 4_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_casualty_loss_deduction: 0
+
+- name: Case 5, joint filers have no cap or income floor.
+  # 18,000 + 12,000 = 30,000
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 45
+        pr_principal_residence_casualty_loss: 18_000
+      person2:
+        age: 43
+        pr_principal_residence_casualty_loss: 12_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: JOINT
+    households:
+      household:
+        members: [person1, person2]
+        state_code: PR
+  output:
+    pr_casualty_loss_deduction: 30_000
+
+- name: Case 6, a dependent's loss is left off the filer's return.
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 45
+        pr_principal_residence_casualty_loss: 5_000
+      person2:
+        age: 17
+        is_tax_unit_dependent: true
+        pr_principal_residence_casualty_loss: 2_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: HEAD_OF_HOUSEHOLD
+    households:
+      household:
+        members: [person1, person2]
+        state_code: PR
+  output:
+    pr_casualty_loss_deduction: 5_000
+
+- name: Case 7, no deduction outside Puerto Rico.
+  period: 2025
+  input:
+    pr_principal_residence_casualty_loss: 5_000
+    filing_status: SINGLE
+    state_code: NY
+  output:
+    pr_casualty_loss_deduction: 0