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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.

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    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 Jun 16 '17 at 7:19
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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).

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