Implement NJ same category rule for gross income

[MaxGhenis]

Closes #7017

Summary

NJ gross income now correctly applies the 'same category rule' per N.J.S. 54A:5-1 - net losses in any income category are disregarded (capped at $0) before summing. Previously, negative values from capital losses, S-corp losses, etc. would incorrectly reduce NJ gross income.

Changes

• Modified nj_gross_income to calculate each NJ income category separately
• Applied max_(0, category_total) to categories that can have losses:
  • Category (b): Business income (self-employment + farm)
  • Category (c): Capital gains (short-term + long-term)
  • Category (d): Rental income
  • Categories (k)/(p): Partnership and S-corp income
• Added 5 test cases for the same category rule

Example

Input (from issue):

• Wages: $136,639
• Dividends: $1,661
• Interest: $343
• Capital losses: -$240,126
• S-corp losses: -$29,134

Before (incorrect): NJ gross income = -$133,628 (losses subtracted)
After (correct): NJ gross income = $138,643 (losses disregarded per same category rule)

Test plan

• All 5 new NJ same category rule tests pass
• All 208 existing NJ tests pass
• make format applied

References

• N.J.S. 54A:5-1 - Gross income defined
• NJ Division of Taxation - Same Category Rule

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[codecov]

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 100.00%. Comparing base (4226fa5) to head (b397630).
⚠️ Report is 1152 commits behind head on main.

Additional details and impacted files

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  Coverage   100.00%   100.00%           
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  Files            1         1           
  Lines            9        22   +13     
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+ Hits             9        22   +13     

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[PavelMakarchuk]

PR Review: NJ Same Category Rule

✅ APPROVED

This PR correctly implements New Jersey's "same category rule" per N.J.S.A. 54A:5-1.

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Verification Summary

Legal Basis Confirmed

Per NJ Division of Taxation: "Losses which occur within one category of gross income may be applied against other sources of gross income within the same category... However, a net loss in one category of gross income may not be applied against gross income in another category."

Categories with max_(0, ...) Applied (Can Have Losses)

Category	Implementation	Correct
(b) Business	self_employment_income + farm_income	✅
(c) Capital Gains	short_term + long_term	✅
(d) Rental	rental_income	✅
(k)/(p) Partnership/S-corp	partnership_s_corp_income	✅

Categories Without Capping (Always Positive or Handled Elsewhere)

Category	Implementation	Notes
(a) Wages	employment_income	Always positive ✅
(e) Interest	taxable_interest_income	Always positive ✅
(f) Dividends	dividend_income	Always positive ✅
(g) Gambling	gambling_winnings	Net winnings ✅
(j) Pensions/IRA	taxable_pension_income + taxable_ira_distributions	Always positive ✅
(n) Alimony	alimony_income	Always positive ✅

Test Calculations Verified

Test 1 (from issue #7017):

• Wages: $136,639.06
• Interest: $171.53 × 2 = $343.06
• Dividends: $830.69 × 2 = $1,661.38
• Capital losses: -$240,125.70 → $0 (disregarded) ✅
• S-corp losses: -$29,133.92 → $0 (disregarded) ✅
• Before fix: -$133,628 (incorrect - losses subtracted)
• After fix: $138,643.44 (correct per same category rule)

All Income Sources Preserved

The formula includes all 12 income sources from the original gross_income_sources parameter:

• ✅ employment_income, taxable_interest_income, dividend_income
• ✅ self_employment_income, farm_income
• ✅ long_term_capital_gains, short_term_capital_gains
• ✅ taxable_pension_income, taxable_ira_distributions
• ✅ partnership_s_corp_income, rental_income
• ✅ gambling_winnings, alimony_income, miscellaneous_income

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Validation Checklist

Check	Result
Same category rule per N.J.S.A. 54A:5-1	✅ Correct
max_(0, ...) on loss-possible categories	✅ Applied
All income sources included	✅ Complete
Test coverage	✅ 5 scenarios
CI passing	✅ All green
Changelog entry	✅ Present

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Minor Note

The parameter file gross_income_sources.yaml is no longer used by the variable but remains as useful documentation of NJ income categories. This is acceptable.

Recommendation: Ready to merge.