[MaxGhenis]

Arkansas casualty deductions now exclude dependents' losses and apply each separately filing spouse's statutory $100 reduction and 10% AGI floor before the existing AR3 proration. Puerto Rico's deduction now uses its two eligible loss categories instead of the unrestricted federal casualty_loss input.

Arkansas

Both casualty deduction variants exclude dependents' losses. For the separate calculation, including status 4 (married filing separately on the same return), the model computes max(casualty_loss - $100 - 10% × max(ar_agi_indiv, 0), 0) for each head/spouse and sums the results. The existing input convention represents one casualty event per person. The historical $500 reduction for 2009 is retained; the $100 reduction applies from 2010. The joint calculation retains one reduction and a combined AGI floor. AR3 then prorates the separate itemized total using the existing AGI shares.

Ark. Code § 26-51-424(b) adopts IRC § 165(h) and (i) as of January 1, 2009. The official 2011 U.S. Code edition, § 165(h)(1)–(2), PDF page 1 supplies the reduction and AGI floor; § 165(h)(5)(B), PDF page 2 combines spouses only on a joint return. Treas. Reg. § 1.165-7(b)(4)(iii) expressly applies the $100 limitation separately to spouses filing separately. These statutory limits precede the AR3 proration; the forms do not establish an exception pooling status-4 spouses' casualty limitations.

Puerto Rico

P.R. Internal Revenue Code § 1033.15(a)(10), PDF pages 167–168 allows uninsured losses on a principal residence from fire, hurricane or other acts of God, and qualifying household personal-property disaster losses. The latter exclude jewelry and cash and require the Governor's disaster designation and a timely assistance claim. The annual personal-property cap is $5,000, or $2,500 for spouses living together filing separately. The statute permits eligible unused losses in the next two years. Schedule A instructions report residence and personal-property losses separately.

• New Person inputs pr_principal_residence_casualty_loss and pr_personal_property_casualty_loss document eligibility and are summed over head/spouse only.
• pr_casualty_loss_deduction retains its API name and represents the residence deduction: eligible loss multiplied by 50% for SEPARATE, otherwise 100%.
• New pr_personal_property_casualty_loss_deduction computes min(share × eligible loss + eligible carryover, cap) and feeds pr_deductions. Carryover is supplied through the new TaxUnit input pr_personal_property_casualty_loss_carryover.
• Generic casualty_loss no longer feeds Puerto Rico deductions; its documentation directs callers to the Puerto Rico inputs. Personal theft losses consequently no longer create a deduction through this input.

Hub microsimulation impact (current head)

A real microsimulation on the default dataset, main at the merge base 461f78e1ee against this PR's head 0284c29586, for 2025 and 2026. The runs went one at a time under the shared heavy-job lock. Sums are weighted.

Output	2025 change	2026 change	2025 records changed (weighted)	2026 records changed (weighted)
ar_casualty_loss_deduction_indiv	+0	+0	0 (0)	0 (0)
ar_casualty_loss_deduction_joint	+0	+0	0 (0)	0 (0)
ar_itemized_deductions_indiv	+0	+0	0 (0)	0 (0)
ar_income_tax	+0	+0	0 (0)	0 (0)
state_income_tax	+0	+0	0 (0)	0 (0)
income_tax	+0	+0	0 (0)	0 (0)
household_net_income	+0	+0	0 (0)	0 (0)
household_benefits	+0	+0	0 (0)	0 (0)

Every compared output is unchanged in both years. Arkansas casualty deductions sum to $0 in the default dataset under main and under this PR (both the separate and the joint variant), so the per-spouse floors don't move any record; the run is real (Arkansas income tax $3.19bn in 2025, $3.26bn in 2026, under both heads). The Puerto Rico change was not in the comparison.

Comparison files are in fixes/9944-impact/ on the hub host.

Impact

Excluding dependents' losses can reduce Arkansas deductions. The separate-spouse correction can move deductions in either direction:

Arkansas separate calculation	Previous	Revised
Spouses' losses $12,000/$8,000 and AGI $30,000/$20,000	$14,900	$14,800
Only the first spouse has the $12,000 loss, same AGI	$6,900	$8,900

The first revised total is subsequently prorated to $8,880/$5,920. As another illustration, spouses with $200,000 AGI and $60,000 losses each lose $100 of combined deductions, raising combined 2025 tax by $3.90 before rounding at the 3.9% marginal rate. Puerto Rico callers must supply eligible losses through the new inputs; a generic $20,000 personal theft loss now produces no Puerto Rico casualty deduction. No national estimate is claimed here; the hub's population run is in the section above.

Tests

• Local: 249 passed across 12 files, each in a separate foreground process with the prescribed thread caps. This includes both Arkansas casualty variants, separate and joint itemized deductions, miscellaneous deductions, gambling losses, the medical floor and individual medical deduction, the 145-case low-income table test, and both Arkansas/Puerto Rico property-test files.
• Quick Feedback: 77 passed across all 8 PR test files. Its test commands process one file at a time; these CI results are separate from the capped local runs.
• Arkansas baseline CI: 803 passed across 79 Arkansas YAML files, including all Arkansas income and itemized-deduction fixtures. This is a grouped state batch.
• All 27 CI checks passed at commit 0284c29586a88db44b8ad928f00e82926c80b304. Formatting, Ruff lint, and the diff whitespace check passed.

Local validation remains incomplete: 40 Arkansas income-folder files (460 cases) and the 3 changed Puerto Rico YAML files (22 cases) still require verified runs under the requested local one-file-per-process protocol. Unusually slow model startup exhausted the job's available test time. An earlier Arkansas integration attempt ended without a recoverable exit status and is included in the pending count. The grouped CI pass does not replace these requested local runs.

Coverage includes dependent exclusion in both Arkansas variants, separate spouses' reductions and AGI floors, the 2017 statutory witness, the 2025 single-loss witness, and deduction-before-proration integration. Puerto Rico cases cover filing statuses, caps, carryover, dependent exclusion, independence from generic losses, and pr_deductions integration. Property tests check the corresponding closed forms and invariants. Verified local runs and Quick Feedback run one file per process; full-state Arkansas CI runs a grouped batch.

Existing scope limits

This PR leaves Arkansas's attribution of dependent income in AGI and AR3 percentage rounding unchanged. Puerto Rico's existing SEPARATE classification remains a broader modeling question: its law refers to spouses living together, while the model derives that status from is_separated.

Axiom parity

axiom: Ark. Code § 26-51-424(b) TheAxiomFoundation/rulespec-us#1411 queued
axiom: P.R. Internal Revenue Code of 2011 § 1033.15(a)(10) TheAxiomFoundation/rulespec-us#1526 queued

[MaxGhenis]

US + core hub merge audit, us#9944 at 0284c29586a88db44b8ad928f00e82926c80b304 (squash): Apply separate-filer casualty limits in Arkansas and statutory loss limits in Puerto Rico.

• Review: GPT-6.1 Sol (gpt-6.1-sol served, codex-2) confirm review APPROVE at 0284c29 (reviews-gen/us-9944/review-confirm.md), after its r1 REQUEST_CHANGES at the same head was resolved by the parity handoff fix; the Arkansas reading is RULINGS us-ar:casualty-loss-status-four-spouse-floors.
• Gates checked live at merge:
  • gh pr checks exits 0;
  • the latest Pull request run at the head concluded success;
  • MERGEABLE;
  • not a draft;
  • no reviewer's latest review requests changes;
  • the semantic-overlap guard;
  • head pinned.
• Impact: Hub microsimulation 2025 and 2026 (base 461f78e vs 0284c29): every compared output unchanged; Arkansas casualty deductions are $0 in the default dataset under both heads (Arkansas income tax $3.19bn/$3.26bn, so the run is real). Section in the body.
• Axiom: Ark. Code § 26-51-424(b) Encoding debt: Arkansas miscellaneous itemized deductions (Ark. Code § 26-51-437) and casualty and theft losses (§ 26-51-424(b)), TY2009-2025 TheAxiomFoundation/rulespec-us#1411 queued