For paying long-term capital gains tax, is Required Minimum Distribution counted as income?

[ttlc22019]

I got the following table from the Internet.  Case in study: John is single and chooses to not get RMD in 2020 so his 2020 income will be under $40,000.  Does it mean that he can sell any large amount of long-term stocks and make big capital gains  without paying tax?  That seems to look like a one-in-a-lifetime opportunity for him as only this year 2020 he can choose to not get RMD.   A separate case: John chooses to get RMD and assume RMD is counted into income so his income is now $50,000.  What taxes will he pay for making $120,000 capital gains? 

Long-term capital gains tax rates for the 2020 tax year

FILING STATUS                    0% RATE             15% RATE                    20% RATE

Single	Up to $40,000	$40,001 – $441,450	Over $441,450
Married filing jointly	Up to $80,000	$80,001 – $496,600	Over $496,600
Married filing separately	Up to $40,000	$40,001 – $248,300	Over $248,300
Head of household	Up to $53,600	$53,601 – $469,050	Over $469,050

Source: IRS 

[macuser_22 · Accepted solution]

Yes, RMD's add to your AGI (total income) but it does not work that way.   The capital gains is also income.

To be 0% your total income including the stock sales must be under $40K.

For example, if your ONLY income was $120,000 capital gains (no other income of any type) then your tax would be about $10,264 for single - the first $39,375 is taxed at 0% the remaining $68,425 at 15% (after the standard deduction is applied).