Does constructive sale count for income wrt ACA subsidy?

[Curmudgeon]

Geez that's a terrible title... Oh well

Hypothetically, if one were planning on getting health insurance off the ACA exchange, and getting a subsidy, and needed to show enough income to stay above the FPL limit, could you do a stock sale, claim the LT cap gain as income towards MAGI, and then immediately repurchase the same stock (at a higher basis)? If you did that in an attempt to generate a capital loss, the IRS would call that a 'constructive sale', and disallow the loss. Just wondering if there's any problem with using it to generate a (paper) gain.
Also, I assume that recharacterizing trad. IRA funds as Roth also counts as income for ACA MAGI purposes?

 

[bingybear]

Geez that's a terrible title... Oh well

Hypothetically, if one were planning on getting health insurance off the ACA exchange, and getting a subsidy, and needed to show enough income to stay above the FPL limit, could you do a stock sale, claim the LT cap gain as income towards MAGI, and then immediately repurchase the same stock (at a higher basis)? If you did that in an attempt to generate a capital loss, the IRS would call that a 'constructive sale', and disallow the loss. Just wondering if there's any problem with using it to generate a (paper) gain.
Also, I assume that recharacterizing trad. IRA funds as Roth also counts as income for ACA MAGI purposes?

If you sell an investment at a loss and buy it right back you have a wash sale. If you wait 31 days you don't have a wash sale (assuming you did not violate other rules. The wash sale moves the loss to the newly purchased investment. So this loss is not allowed.

You can sell at a gain and buy it back and the gain is still income and it would be seen as part on the MAGI for ACA purposes.
A Roth conversion would create an income unless all the $ in the TIRA were after tax with no earnings.

 

[pb4uski]

Yes, gains trading is fine and would create income for ACA since the gain is included in tax return AGI.

As do Roth conversions assuming IRA was a deductible IRA or from the rollover of a tax-deferred 401k.

Recharacterizations are a reversal of a Roth conversion so you misused the term recharacterization in your OP... what you described was a conversion.