Booyah Breakdown: Tax Twists

Let's say you own 100 shares of Ford and you're in the hole $8 a share. But you love it, so before you do anything, go buy 100 more shares.

Now you've doubled your position and are still in the game. Then, wait until the 31st day from the purchase of your second lot of shares and sell the original losers to get the tax loss on your return.

(On the administrative side: Be sure to tell your broker that you've chosen to sell the first lot of shares and make sure there's some reference to that on your statement. If you don't, the sale might be seen as a last-in, first-out sale, and that would defeat the purpose.)

The upside is that now you can claim the $500 loss on your return without violating the 31-day window policy, and you never had to give up your position in the stock. The downside is that you have to fork over more money to buy the second lot. You also run the risk that the stock could fall even further over the next month, and then you've got, well, "double" trouble.

Nov. 28 is the last day you can "double up" for 2006. If you're considering it, get it done quickly.

So before the year's end, go through your portfolio and decide which stocks are worth keeping and which should be sold. And if you have a deep attachment to some of your losers, consider doubling up so that your tax return can benefit from your portfolio's pain.