Can I fund a Roth IRA with proceeds from the sale of stock in a brokerage account that were NOT taxed due to taxable income levels being in the 0% tier for LT Cap Gains?

[howard23]

Example: Sell stock in brokerage account generating $16,000 long term capital gain. Total taxable income for the year (married filing jointly) is less than $96,700, so long term capital gains are taxed at 0%. Can I contribute that $16,000 to a Roth IRA for myself and spouse ($8,000 each, both over 50). Since that gain hasn't been taxed, can it be used to fund the Roth IRAs? Assume we are eligible to contribute to the Roth IRAs and we have more than $16,000 in "earned income".

[VolvoGirl · Accepted solution]

It doesn’t matter where the money comes from to make a IRA contribution as long as you have enough earned income like W2 wages to qualify.  The stock sale is a separate transaction.