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The short answer is ignore the capital gains when looking at brackets. The 97 tax act basically dictated that capital gains wouldn't boost you into a new bracket. That's why Sch D is such a nightmare now. If you're trying to figure your bracket, take all income except capital gains and deduct personal exemptions (2700 ea) and the standard deduction (6900 MFJ) to get to taxable income. Below 40k? 15%, etc.
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