Update 2021-05-31: AGI already includes net realized capital gains: 

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Hi - looks like you did a relative link (https://www.lesswrong.com/capital-gains-in-agi-big.png) but you want this absolute link instead: https://www.jefftk.com/capital-gains-in-agi-big.png

Fixed! Thanks :)

For others confused like me: this is an update to a longer post. AGI in context is Adjusted Gross Income.

Realized gains only (that is, only gains on things you sell or convert to another form), and short-term only (generally, things held less than a year).  You have to read schedule D to figure out that long-term gains are reported and taxed separately (at a lower rate, and not increasing your bracket for other income).   

If you read schedule D you will see that long-term capital plans are included in AGI, even though they are taxed at a separate and lower rate