Selling losing investments held in taxable brokerage firm accounts can lower your 2011 tax bill because you can deduct the resulting capital losses against any capital gains from earlier in the year. Plus, you can deduct up to another $3,000 of net capital loss (or $1,500 if you are married and file separately) against ordinary income from salary, self-employment activities, alimony, interest, or whatever.

Any excess capital net loss is carried forward to future years and puts you in position for tax savings in future years. (This year, December 31 falls on a Saturday so Friday will be the last day you can sell stock.)

Future Tax Saving Idea: Convert a Traditional IRA into a Roth The best scenario for this strategy is when: Your traditional IRA is (or was) loaded with equities and suffered losses in the stock market volatility of the past few years; and You expect to be in the same or higher tax bracket during retirement.     If your traditional IRA is worth substantially less than it once was, the tax hit from converting it into a Roth account is also substantially less. That's because a Roth conversion is treated as a taxable liquidation of your traditional IRA followed by a non-deductible contribution to the new Roth account.     After the conversion, all the income and gains that accumulate in the Roth account, and all withdrawals, will be federal-income-tax-free, assuming you meet the requirements for tax-free withdrawals. So you avoid having to pay high tax rates on withdrawals taken during your retirement years.     While even the reduced tax hit from converting is unwelcome, it could be a small price to pay for future tax savings. If you are interested in a Roth conversion, contact your tax adviser for a full analysis of all the relevant variables.

2. Set Up Loved Ones to Pay Zero Percent Tax Rate on Investment Income

For 2011, the federal income tax rate on long-term capital gains and qualified dividends is 0 percent for gains and dividends that fall within the 10 or 15 percent rate brackets. While your tax bracket may be too high to take advantage of the 0 percent rate, you probably have loved ones who are in the bottom two brackets. Consider giving these folks appreciated stock or mutual fund shares. They can sell the shares and get 0 percent tax on the resulting long-term gains.

Remember: The gains of the gift recipient will be long-term as long as your ownership period plus the recipient's ownership period equals at least a year and a day.

Giving away stocks that pay dividends is another tax-smart idea. As long as the dividends fall within the gift recipient's 10 or 15 percent rate bracket, they will qualify for the 0 percent federal income tax rate.

However be aware that if you give away assets worth over $13,000 during 2011 to an individual gift recipient, it will generally eat into your $5 million unified federal gift and estate tax exemption. However, you and your spouse can together give away up to $26,000 without any adverse effects on your respective exemptions. 

Warning: If your gift recipient is under age 24, the Kiddie Tax rules could potentially cause some of his or her capital gains and dividends to be taxed at the parent's higher rates. That would defeat the purpose. Contact your tax adviser if you have questions about the Kiddie Tax.

3. Give to Charities with Taxes in Mind

For those with charitable inclinations, here are two potential ideas involving stock and your IRA.

• Donate Appreciated Stock to Charity; Sell Losers and Donate Cash
  
  If you have appreciated stock shares (currently worth more than you paid for them) that you've owned for over a year, consider donating them to IRS-approved charities.
  
  You can generally claim an itemized charitable contribution deduction for the full market value at the time of the donation and avoid any capital gains tax hit.
  
  On the other hand, don't donate loser stocks. Sell them, book the resulting capital loss, and give away the cash sales proceeds. That way, you can generally write off the full amount of the cash donation while keeping the tax-saving capital loss for yourself.
  
  Caution: You must itemize deductions to gain any tax-saving benefit from charitable donations, except for donations out of an IRA, as explained immediately below.
  
• Make Charitable Donations Out of Your IRA (if Age 70 1/2 and Older)
  
  For 2011, Congress restored a provision that allows you to make up to $100,000 in charitable cash donations directly out of your IRA -- if you'll be age 70 1/2 or older by the end of the year. Such direct-from-IRA donations are called qualified charitable distributions (QCDs). Donations made in this fashion don't directly affect your tax bill, because QCDs are tax-free and no deductions are allowed for them.
  
  However, QCDs count as withdrawals for purposes of meeting the minimum required distribution rules that apply to traditional IRAs. Therefore, taxes can be avoided by arranging for tax-free QCDs in place of taxable minimum required distributions, and this advantage is available whether you itemize deductions or not. If your spouse owns IRAs and is over age 70 1/2, he or she is entitled to a separate $100,000 QCD privilege for 2011.