I just ran another practice 1040 and made the only capital gains as a sale of stock with a long term gain of 20000. The same results. The 20k flows right from line 13 to line 38 and ends up on line 43 as part of the taxable income. It appears to me that it is taxed as ordinary income and that "NO CAPITAL GAINS TAX" does not apply. The only other income is 15k as taxable interest(line 8a) and 8.5k on line 20b (Social Security benefits. Line 22 is 42,712. Line 38 is 42,225. Line 40 is 7,850. Line 41 is 34,325. Line 42 is 4,050. Line 43 (taxable income) is 30,325. Tax is 2,060. When I do not include the 20k the tax is 313. Also no tax on the Social security. Line 38 is 15k. Line 43 is 3,100. It looks to me like "NO CAPITAL GAINS" means none above what is taxed as ordinary income. I am using Turbo Tax for all these calculations and assume they are correct. Once again, am I missing something. Thank you Coleen for all your help. I was all excited about NO CAPITAL GAINS below certain limits but I am just not seeing it.
