Do we only wrap on space ? ( Are the punctuation characters part of the word ? ).
Is there always a space after a ',' ?
Can there be multiple spaces between words ?

There will always be only one space separating words. I will ask this to be added as a rule.

We have added Rule 4. There will always be only one space separating words.

What are the word-breaking rules? In your example "Encyclopedia" is hyphenated. What are the rules to determine where a word can be broken?

When a word is longer than the wrap position value only in this case should you split it, placing the first part into the next output row and adding a dash at the wrap position.

There are no traditional language rules regarding hyphenation of words. You should put WP-1 characters of the word plus a dash into the next output row and the rest into the subsequent output row.

There is a rule "When a word crosses the wrap position you should place the entire word into the next output row". Why in sample a row "they call it the present." break like

1.they call it the 
2.present.

Word "the" cross the wrap position and should be in next row

1.they call it 
2.the present.

Sample Data

ID Text                                                     WrapPosition
-- -------------------------------------------------------- ------------
3  Everyday is a gift, that’s why they call it the present. 15

ID WrapID Text
-- ------ --------------------
3  1      Everyday is a
3  2      gift, that’s why 
3  3      they call it the 
3  4      present.

Сorrect me if I misunderstood the rule

For this row difference "Wrap Position" in "Sample Data" and "Sample Script" (in "Sample Data" -15, in "Sample Script" - 17)

Sorry. The expected output is incorrect. I'll request to have it corrected.