Fix MS income tax to apply federal capital loss limitation

[policyengine]

Summary

Fixes #6964 - Mississippi income tax now correctly applies the federal $3,000 capital loss limitation instead of allowing unlimited capital losses to offset ordinary income.

Background

Mississippi Form 80-105 Line 40 ("Capital gain (loss)") flows from federal Schedule D, which already has the $3,000 loss limit applied per IRS regulations. Previously, PolicyEngine was using the raw capital_gains variable which sums unlimited capital gains and losses without applying the federal limitation.

Changes Made

1. Created new variable loss_limited_capital_gains (policyengine_us/variables/household/income/person/capital_gains/loss_limited_capital_gains.py)

   • Person-level variable that allocates the tax unit's loss_limited_net_capital_gains proportionally to each person
   • When capital gains are positive, returns each person's original amount
   • When capital losses occur, applies the federal loss limitation proportionally across persons

2. Updated MS income sources parameter (policyengine_us/parameters/gov/states/ms/tax/income/income_sources.yaml)

   • Changed from capital_gains to loss_limited_capital_gains
   • Added comment explaining the federal Schedule D $3,000 capital loss limit

3. Added integration test (policyengine_us/tests/policy/baseline/gov/states/ms/tax/income/integration.yaml)

   • Tests MS joint filers with large capital losses (-$4.77M net)
   • Verifies tax is $17,136 (with loss limitation) instead of $0 (without limitation)
   • Test case matches the scenario described in issue MS income tax incorrectly allows unlimited capital losses to offset income #6964

Test Results

All MS integration tests pass, including the new test case:

============================== 6 passed in 6.73s ===============================

Impact

This fix ensures Mississippi income tax calculations correctly follow federal Schedule D rules for capital loss limitations, preventing large capital losses from incorrectly zeroing out state tax liability.

🤖 Generated with Claude Code

[codecov]

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 100.00%. Comparing base (ba52386) to head (4b7cc8c).
⚠️ Report is 42 commits behind head on master.

Additional details and impacted files

@@            Coverage Diff            @@
##            master     #6966   +/-   ##
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  Coverage   100.00%   100.00%           
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  Files            2         1    -1     
  Lines           26        17    -9     
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- Hits            26        17    -9     

Flag	Coverage Δ
unittests	100.00% <100.00%> (ø)

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