Q. Would my taxes be 15% on the longterm gains in excess of 40k and the 95k taxed as ordinary income on a tiered level?
A. No. The entire $55K LT gain will be taxed at 15%. This is because your ordinary income, including ST gains is taxed first (goes into the first $40,525 of taxable income). Another way to look at it is: the LT gain goes on top of ordinary income.
As others stated, the calculation is shown on the "Qualified dividends and capital gains worksheet" (sometimes the "Schedule D worksheet" is generated instead).
