The Dow may be ending the year in record territory, but most of us still have a few duds sitting in our portfolios (after all, many late-'90s high fliers are still down 50 percent or more from their peaks).

If there's not a reasonable chance of recovery soon, sell those clunkers now and use the losses to offset capital gains you've reaped this year.

If, perish the thought, you have more losses than gains, you can take up to $3,000 of those leftover losses to offset your ordinary income. If your losses are greater than $3,000 (now this is getting depressing), you can carry the excess forward to reduce your taxable income in 2007 and later years.