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Thanks Bill,

Your reply was much clearer than mine. Lets see if my old brain finally understood.
If you have LT gains and ST losses or viceversa, you net them first before calculating any tax. I had thought before that the LT and ST rates were applied before calculating net capital gain. So it is clear now, you may only pay taxes on the net.
So... First calculate the net capital gain to establish the bracket and rates.
If the net is a loss, no worries, use up to 3000 and carryover the rest.
If ST gains > LT losses, then the net is all ST. Add to regular income.
If ST losses < LT gains, then the net is all LT. Use reduced rate.
If both gains, then you pay each portion at different rates. ST is added to regular income and LT is calculated at reduced rate.

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