(FORTUNE Magazine) – NOW THAT THE PRESIDENTIAL ELECTION IS over, it's time to turn our attention to another kind of campaign: the annual battle to keep the taxman at bay. It's too early to know what the second Bush administration will deliver in the way of tax reform, but this year has brought some special circumstances that merit especially careful planning. In October, Congress passed the American Jobs Creation Act of 2004. Designed primarily to hand out corporate tax breaks, the bill also sneaked in some fairly big changes for individuals. Meanwhile, for the first time in what seems like an eternity, many investors are sitting on gains in their stock portfolios. Combine those two factors, and the moves you make between now and the end of the year could save you--or cost you--thousands of dollars.

● Time your gains. Thanks to the market rebound--the S&P 500 is up about 50% since bottoming out in late 2002--you may be holding some shares with juicy returns. But plan any sales carefully. If you unload a winning stock that you've held for more than a year, you'll be taxed at the long-term capital gains rate of 15%. If you've owned the stock for one year or less, however, your gains will be taxed as ordinary income. For those in the top bracket (35%) that means paying more than twice as much. So if you're close to the one-year mark, consider hanging on a bit longer--but only, of course, if the stock's fundamentals justify it. If not, by all means bail out now; a taxable gain always beats a loss. Another reminder: If you want to sell a portion of a stock holding that you acquired at different prices, unload your highest-cost shares first (assuming you've held them for more than a year). That way you'll minimize your gain for tax purposes.

If you plan to sell mutual fund shares, do so before the fund makes its annual capital gains distribution, usually in December. Assuming you've held the shares for more than a year, you'll pay the 15% capital gains tax on your profits. But if you sell after the distribution, some of your gain will probably be taxed at the higher ordinary income rate. (Don't worry about missing the distribution; as soon as it's made, the fund's net asset value declines by an equal amount.) For the same reason, put off investing in new fund shares until after the distribution date.

● Embrace your losses. Despite the market's comeback, legions of investors still hold stocks that have never recovered from their post-bubble collapse. If you're among them, consider tax-loss selling. If you dump your dogs by Dec. 31, the resulting losses can offset any capital gains you realize this year. If you have more losses than gains, you can apply up to $3,000 of the excess to reduce your ordinary income. You can also carry any leftover losses forward indefinitely, for use against future capital gains.

● Sell it and buy it. No question, it can be hard to let go of a loser if you think there's a chance it may rebound. One solution: Sell the stock now to lock in the capital loss and then buy it back. You must wait at least 31 days, or the IRS will not allow you to claim the loss this year under its so-called wash-sale rule. Worried that the stock will zoom up before the waiting period is over? Hedge your bets by buying a similar stock or a sector-specific mutual fund that holds the stock.

Even if you change your mind and buy the stock back before the wash-sale period is over, says Don Weigandt, a tax specialist at J.P. Morgan's private bank, you'll still be able to use your loss. You just won't be able to apply it against your 2004 taxes. "The wash-sale rule doesn't eliminate the loss, it just defers it," says Weigandt. For instance, say you originally bought Cisco Systems stock back in the halcyon days when it commanded $60 a share. Now that it has sunk to $20, you decide to sell and apply the $40-a-share loss against your 2004 capital gains. Fast-forward a week: The stock seems to be on the move, you regret selling and decide to buy it back at $25. You can no longer apply the loss against your 2004 capital gains. But the loss will be added to the cost basis of the shares you just bought--in tax terms, you've just paid $65 ($40 plus $25) for those new shares. When you eventually sell your Cisco position, you'll generate a smaller gain or a larger loss.

● Defer with care. If you participate in a deferred-compensation plan--some 90% of FORTUNE 1,000 companies offer them to management-level employees--you'll need to heed some big changes that are about to take effect. Deferred-compensation programs resemble 401(k) plans in that they allow you to set aside pretax dollars that grow tax-free until you withdraw them. But they usually permit you to contribute much more than you can in a 401(k)--sometimes up to 100% of your compensation. You can typically take the money out without penalty at any age, as long as you stipulate beforehand when you want the withdrawal to take place. Starting in 2005, however, if you want to take money out of a deferred-comp program earlier than you had originally planned, the IRS will slap you with a 20% penalty and interest charges. (You can avoid the sanctions only if you meet the very narrowly defined interpretation of an "unforeseeable emergency." Having your children accepted at Ivy League colleges, for instance, doesn't meet the criteria.) At the same time, the legislation makes it much more difficult to delay payouts. "Make sure you fully understand the changes to your plan before you defer any money for 2005," advises Andrew Liazos, a partner who heads up the executive compensation practice at law firm McDermott Will & Emery.

● Primp your ride. If you're in the market for a new set of wheels, you may be thinking of donating your old car to charity. If you do it before year-end, you'll be able to take a tax deduction for what you document to be the car's fair-market value. Otherwise, starting in January you can deduct only the amount the charity actually receives from selling your car. That's almost guaranteed to be lower than your own estimate. (The exception: If you value the car at $500 or less, you can take the deduction without waiting for the charity to sell it.)

Speaking of vehicles, if you are self-employed and you've had your eye on a brand-new truck or SUV for your business, consider buying it before year-end. If you do so, notes John W. Roth, an analyst with tax information provider CCH Inc., you'll be able to take advantage of two tax breaks: First, you'll get to take an immediate write-off for the first $25,000 you spend. You'll also enjoy special "bonus depreciation" equal to 50% of the remaining cost of the vehicle--as long as it weighs more than 6,000 pounds. After Dec. 31, you'll lose the bonus depreciation.

● Love your sales tax. If you live in an area with low (or no) state or local income taxes--or if you're just a big spender--you might be in for a nice tax break. Starting this year, taxpayers who itemize have the choice of deducting either their state and local income taxes or their state and local sales taxes. This is obviously a no-brainer for those who live in states (like Florida, Texas, Washington, and South Dakota) that levy a state sales tax but no income tax. But even if you live in a state that charges income tax, you may benefit from the change if you've been racking up big purchases throughout the year. While Congress considers a consumption tax, for now at least you can enjoy a consumption deduction.