1

I invested in a capital asset which has greatly appreciated in value. I have held it over one year and am looking to sell a substantial amount. The tricky part is I do not want to sell enough to put me over $118k of Modified Adjusted Gross Income for the year, which would start to phase me out of being able to contribute to my Roth IRA.

My thought is I could sell another long term capital asset I have at a loss, so it counts against my capital gains, thus keeping me below the $118k threshold. Here is an example. Let's say my income for the year from my job is $100k. If I realize a $20k capital gain, and I harvest a $20k loss on another capital asset, will this cancel out my capital gains, thus making my Modified Adjusted Gross Income $100k? And keeping me under the $118k limit to allow me to contribute fully to my Roth IRA?

Thanks so much.

Improve this question
1
  • 1
    If you want to take the loss, but then buy back the same security because you still think it's a good investment (even though currently down), be sure you wait 31 days before repurchasing, otherwise the wash sale rule forces you to defer the loss.
    – dave_thompson_085
    Commented Jun 16, 2017 at 7:19

1 Answer 1

Reset to default
3

Yes, capital gains and losses are included in your adjusted gross income, with the only exception that a net capital loss is usually limited to $3000 per year. So you could balance out a $20k gain with a $20k loss to have no net effect on your modified adjusted gross income (MAGI).

Improve this answer

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .