You are allowed to offset capital gains with capital losses. If you have capital gains equal to or more than the stock loss, then it is fully deductible. If you have no other capital gains or the loss exceeds the capital gains is limited to the lessor amount of the loss that exceeds the gain or $3,000 (1,500 if your filing as married filing separate status). If the loss is limited in the current year, you may carry over the unused amount into future years until it is completely used up.

Is the loss I incurred from buying and selling the same 100 shares of stock in the same day deductible?

The tax laws "wash sale" provisions prohibit you from recognizing any loss from the sale of buying and selling substantially the same stock within 30 days of selling a stock. If you incur a gain within the 30 day period the "wash sale" provisions do not apply and gain is reportable on IRS Schedule D.

Are the employee stock options I just received taxable on my tax return?

No. If your stock option is granted under a employee stock option plan, the granting or exercise of the option is not included as income on your tax return. You will report either the income or loss on IRS Schedule D when you sell the stock that you purchased by exercising the option. Speak to your local CPA about the tax strategies with your options.

A. Gains and losses from the sale of a stock are taxable, but there are strategies to minimize your tax bill.

Bill Doyle, a certified public accountant and personal financial specialist in St. Petersburg, Fla., said it is important to first consider how long you've owned a stock for which you've had capital gains .

``If you held that stock for one year or longer, you will be taxed at a favorable tax rate,' he said. Generally speaking, that means a maximum rate of 20 percent.

``If you held it for less than a year, it's taxed at ordinary tax rates. So if you're in the 39.6 percent bracket, it's taxed at 39.6 percent.'

Time is less important for stocks that are sold at a loss, called capital losses. Taxpayers can deduct $3,000 per year for such losses regardless of when a stock was purchased. If a loss involves more than $3,000, the remaining balance can be carried over into subsequent tax year and be deducted in $3,000 increments.

Tax planning can be especially important in years when capital gains can be offset by capital losses.

``If you have short-term gains and those gains would be taxed at almost 40 percent, it behooves you to take short-term losses or long-term losses to reduce your tax bill,' said Laurence Foster, a certified public accountant and personal financial specialist in New York.

In other words, if you profit $3,000 from the sale of a stock, you may be able to avoid paying taxes on it if you can show a $3,000 loss from the sale of another stock.

There are some rules governing the use of capital losses to offset capital gains, but generally good planning can make it possible to trim a tax bill.

Foster said good record-keeping is key to making this strategy work.

In many cases, an investor owns shares of a particular stock that were purchased at different times and at different prices. When it's time to sell, they can specify which shares they are selling to minimize their tax exposure.

``If you want to sell the stock you bought at the most expensive price, for example, you have to tell the broker at the time of transaction to sell the most expensive shares or the shares you bought on July 1, not the ones on March 1,' Foster said.

The government can ask to see proof of purchase price and proof of sale price for a capital gain or loss, and the transaction paperwork needs to reflect that.

But a caveat -- the desire to trim a tax bill shouldn't supersede common sense.

``Don't sell a stock just to take a tax loss,' said Doyle. ``If it's down, evaluate its position. A stock may warrant holding onto if it looks like it could come back.'