[MaxGhenis]

Spouses filing a combined Missouri return enter their own income, losses, and federal deductions in separate MO-1040 columns. We allocate those amounts by owner and preserve negative Missouri AGI when dividing the couple's taxable income.

Spouses divide joint federal AGI using the MO-1040 worksheet and Line 7 instructions. The department specifies capital-loss allocation in 12 CSR 10-2.010(2).

Changes

• Add mo_federal_adjusted_gross_income for each filer's Line 1. Use allowed federal deductions, attribute business losses to their owners, and allocate deductible capital losses by responsibility for the excess.
• Apply the negative federal AGI treatment from 2024. When joint federal AGI exceeds zero and one spouse's separate amount falls below zero, that spouse enters zero and the other enters the joint amount.
• Calculate Line 5 as federal AGI plus Missouri additions less subtractions, without flooring each spouse's amount. Preserve main's mo_additions calculation.
• Limit each spouse's MOST subtraction to available Missouri AGI in 2024–2025. Include Missouri additions before applying that limit.
• Add both Line 5 columns before deducting the couple's deductions. Divide taxable income among positive columns; a spouse with nonpositive Missouri AGI receives zero taxable income.

The department explains the negative federal AGI treatment in the 2025 instructions and 12 CSR 10-2.010(5).

Invariants

For supported single and joint returns using calculated federal income and deduction components:

1. The filers' Line 1 amounts sum to federal AGI through 2023 and its nonnegative part from 2024. Dependents receive zero.
2. Each filer keeps their own income, losses, and allowed deductions, subject to Missouri's capital-loss netting and negative federal AGI treatment.
3. Each filer's Line 5 equals Line 1 plus additions less subtractions, subject to the MOST limit for 2024–2025.
4. Swapping head and spouse labels preserves each person's Line 1, Line 5, taxable income, and the couple's Missouri tax.
5. Taxable income remains nonnegative, nonpositive columns receive none, and the total cannot exceed nonnegative combined Missouri AGI.

Methodology choices

• Apply the 2025 combined-return floor method from 2024. The department directs filers to enter zero for negative federal AGI in the 2024 instructions, without explaining combined-return allocation. It amended 12 CSR 10-2.710 effective July 30, 2024.
• Map the MOST limitation to tax years 2024–2025. The department limited the lower-income spouse's subtraction in its February 2024 amendment. It permitted negative AGI in that example in its April 2026 amendment. It gives no explicit tax-year transition.
• Take MOST after other subtractions. The department does not specify that ordering.
• Divide adjustments equally when tax-unit inputs omit ownership. Congress divides the family-coverage HSA contribution limit equally between spouses unless they agree otherwise in 26 USC 223(b)(5). We use equal allocation of unowned actual deductions as a data fallback.
• Use Example 2's stated pro rata fractions for capital losses. Those fractions yield deductions of $2,836.36 and $163.64; the department prints $2,850 and $150 in the table. The department printed the second spouse's positive $3,000 long-term gain in the 2018 proposed amendment. It used the opposite sign in later PDFs.
• Allocate a binding section 461(l) business-loss limit in proportion to each spouse's business losses. Use each spouse's net capital loss when inputs omit the short-term and long-term split.
• Retain continuous Line 7 shares. The department asks filers to round their percentages to whole numbers.
• Use component inputs for the accounting identity. We do not infer ownership from a directly supplied aggregate above_the_line_deductions override.

Tests

For final head cfb1f14, selective CI passed 52 YAML cases and four property tests across this PR's five changed test files. PR validation, package checks, and partner tests also passed.

For 8917e3a, full CI passed 2,432 cases across 133 eligible core files and 163 cases across 13 Missouri YAML files, covering incoming changes from main. We verified identical executable Python content and YAML data between those two heads. The selective runner collected no coverage data.

Formatting and lint passed locally. Local single-file retries hit startup timeouts, so the test counts above come from CI.

In 2023, the 40-year-old primary spouse deducts $6,500 of a $7,000 IRA contribution. The primary spouse's AGI equals $40,000 − $6,500 − $2,500 − $300 = $30,700; joint AGI equals $38,700.

Microsimulation impact

To be measured before merge.

Axiom

axiom: 12 CSR 10-2.010(2), (4)-(5), 12 CSR 10-2.710(1) and MO-1040 Lines 1 and 5-7 queued — dispatch-ready draft held for Max's go to file. us-mo/policies/income_tax/2026_noncombined_resident_core defers combined-return allocation and negative federal AGI; rulespec-us#1517 does not cover Missouri. Blockers: the pinned corpus release predates us-mo/regulation/2026-09-14-income-tax-regulations (which holds the current 2.010 and 2.710), the 2019 and 2024 versions of 2.010 are not ingested, and the Person-level federal deduction prerequisite is rulespec-us#1494.

🤖 Generated with Claude Code

[codecov]

Codecov Report

❌ Patch coverage is 97.87234% with 2 lines in your changes missing coverage. Please review.
✅ Project coverage is 98.40%. Comparing base (909176a) to head (8843e8a).
⚠️ Report is 315 commits behind head on main.

Files with missing lines	Patch %	Lines
...d_gross_income/mo_federal_adjusted_gross_income.py	97.46%	1 Missing and 1 partial ⚠️

Additional details and impacted files

@@             Coverage Diff             @@
##              main   #10015      +/-   ##
===========================================
- Coverage   100.00%   98.40%   -1.60%     
===========================================
  Files            4        3       -1     
  Lines           76      125      +49     
  Branches         2       11       +9     
===========================================
+ Hits            76      123      +47     
- Misses           0        1       +1     
- Partials         0        1       +1     

Flag	Coverage Δ
unittests	98.40% <97.87%> (-1.60%)	⬇️

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