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So in this scenario it would behoove me to sell another stock at a loss to eradicate the $10K gain. If that loss were $10K (for the sake of argument), that would eliminate any capital gain tax and also would not add to AGI. Correct?

If your capital gains minus your capital losses, after accounting for the carry forward loss, net to $0, then line 13 of your 1040 will be $0, and there won't be any income added to your AGI.

That said, why wouldn't you just sell enough of the stock with a gain to realize $7k in gains, instead of selling the entire position for $17k in gains? Then you wouldn't have to sell another stock at a loss to get to the $0 net. Or you could sell just enough to realize $4k in gains, and use the other $3k of carry forward loss to reduce your ordinary income.

I would also caution against generating wash sales by buying the same stock within 30 days (before or after) of the sale that generates the loss.

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