From 75d14398992f76b459a928d626b8f01ab7fb5e77 Mon Sep 17 00:00:00 2001
From: Cody Kallen <cody.kallen@aei.org>
Date: Wed, 10 Jan 2018 17:23:55 -0500
Subject: [PATCH] add business loss limitation

---
 taxcalc/current_law_policy.json          | 30 ++++++++++++++++++++++++
 taxcalc/functions.py                     |  8 +++----
 taxcalc/reforms/TCJA_Reconciliation.json |  3 +++
 3 files changed, 37 insertions(+), 4 deletions(-)

diff --git a/taxcalc/current_law_policy.json b/taxcalc/current_law_policy.json
index 6e9d573fb..2e7f7d067 100644
--- a/taxcalc/current_law_policy.json
+++ b/taxcalc/current_law_policy.json
@@ -619,6 +619,36 @@
         "out_of_range_action": "stop"
     },
 
+    "_ALD_BusinessLosses_c": {
+        "long_name": "Maximum amount of business losses deductible",
+        "description": "Business losses in excess of this amount may not be deducted from AGI.",
+        "section_1": "Above The Line Deductions",
+        "section_2": "Misc. Exclusions",
+        "irs_ref": "",
+        "notes": "",
+        "row_var": "FLPDYR",
+        "row_label": ["2013",
+                      "2014",
+                      "2015",
+                      "2016",
+                      "2017"],
+        "start_year": 2013,
+        "cpi_inflated": true,
+        "col_var": "MARS",
+        "col_label": ["single", "joint", "separate", "headhousehold", "widow"],
+        "boolean_value": false,
+        "integer_value": false,
+        "value": [[9e99, 9e99, 9e99, 9e99, 9e99],
+                  [9e99, 9e99, 9e99, 9e99, 9e99],
+                  [9e99, 9e99, 9e99, 9e99, 9e99],
+                  [9e99, 9e99, 9e99, 9e99, 9e99],
+                  [9e99, 9e99, 9e99, 9e99, 9e99]],
+        "range": {"min": 0.0, "max": 9e99},
+        "out_of_range_minmsg": "",
+        "out_of_range_maxmsg": "",
+        "out_of_range_action": "stop"
+    },
+
     "_II_em": {
         "long_name": "Personal and dependent exemption amount",
         "description": "Subtracted from AGI in the calculation of taxable income, per taxpayer and dependent.",
diff --git a/taxcalc/functions.py b/taxcalc/functions.py
index f4a6b9bec..f376c9663 100644
--- a/taxcalc/functions.py
+++ b/taxcalc/functions.py
@@ -221,7 +221,7 @@ def ALD_InvInc_ec_base(p22250, p23250, sep,
 def CapGains(p23250, p22250, sep, ALD_StudentLoan_hc,
              ALD_InvInc_ec_rt, invinc_ec_base, ALD_InvInc_ec_base_RyanBrady,
              e00200, e00300, e00600, e00650, e00700, e00800,
-             CG_nodiff, CG_ec, CG_reinvest_ec_rt,
+             CG_nodiff, CG_ec, CG_reinvest_ec_rt, ALD_BusinessLosses_c, MARS,
              e00900, e01100, e01200, e01400, e01700, e02000, e02100,
              e02300, e00400, e02400, c02900, e03210, e03230, e03240,
              c01000, c23650, ymod, ymod1, invinc_agi_ec):
@@ -249,9 +249,9 @@ def CapGains(p23250, p22250, sep, ALD_StudentLoan_hc,
                                         p22250 + ALD_InvInc_ec_rt * p23250))
         invinc_agi_ec = ALD_InvInc_ec_rt * (e00300 + e00650) + CG_ec_RyanBrady
     # compute ymod1 variable that is included in AGI
-    ymod1 = (e00200 + e00700 + e00800 + e00900 + e01400 + e01700 +
-             invinc - invinc_agi_ec +
-             e02000 + e02100 + e02300)
+    ymod1 = (e00200 + e00700 + e00800 + e01400 + e01700 +
+             invinc - invinc_agi_ec + e02100 + e02300 +
+             max(e00900 + e02000, -ALD_BusinessLosses_c[MARS - 1]))
     if CG_nodiff:
         # apply QDIV+CG exclusion if QDIV+LTCG receive no special tax treatment
         qdcg_pos = max(0., e00650 + c01000)
diff --git a/taxcalc/reforms/TCJA_Reconciliation.json b/taxcalc/reforms/TCJA_Reconciliation.json
index 0b0fed23b..1f29111ce 100644
--- a/taxcalc/reforms/TCJA_Reconciliation.json
+++ b/taxcalc/reforms/TCJA_Reconciliation.json
@@ -153,6 +153,9 @@
         "_ALD_Alimony_hc":
             {"2019": [1],
              "2026": [0]},
+        "_ALD_BusinessLosses_c":
+            {"2018": [[250000, 500000, 250000, 250000, 500000]],
+             "2026": [[9e99, 9e99, 9e99, 9e99, 9e99]]},
         "_ID_prt":
             {"2018": [0],
              "2026": [0.03]},