If I understand you correctly, it does seem puzzling at first glance why no-tax stock sale would appear in adjusted gross income (AGI) (line 11). But AGI is not the same as taxable income, despite the flow of the form (1040).
When you get to lines 15 and 16, the tax is NOT calculated using the Tax Table, but a worksheet called the Capital Gains/Qualifying Dividends. On this worksheet, your income is broken apart, and ordinary income is taxed at the ordinary income rates while the stock gain is taxed at the capital gain rate, then these two taxes are added back together.
So it looks all wrong, but comes out right in the end.
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