In the US, when tallying gross income, do capital gains (short term or long term) count toward your gross income, before capital losses? OR do capital losses subtract from your capital gains before it counts as gross income? and would this order of operations be any different for adjusted gross income

This is not for tax compliance, but does involve how income is reported on a tax return, if the tax return was used to indicate gross income for a certain year.

1 Answer 1


You only report the bottom line on your form 1040 (it goes to line 13/14). All the calculations are done on Schedule D/Form 4797.

So the order doesn't matter, and it is "above the line" - the net result (i.e.: gains reduced by the losses) is calculated into the AGI. Remember that losses can only be deducted up to a certain limit, above which you'll have to carry forward to the next year.

The distinction between long term and short term matters for calculation of the tax itself, but for AGI it doesn't matter. Same goes for dividends (qualified/non-qualified).

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