Unlike New Year's resolutions, your year-end tax planning must be completed before popping the champagne corks at midnight on Dec. 31.

In this month's column, we'll address year-end tax planning techniques that you can use to reduce this year's tax bill.

Accelerate losses, defer gains

If you have capital gain income in 2000, you can sell off losing securities until Dec. 31 to offset some or all of those gains. But if you decide to take losses in a year in which you don't report capital gains, you can deduct no more than $3,000 of the total loss in that year. You can continue to deduct $3,000 per year in excess of capital gains, or as a straight Schedule "D" deduction if there are no capital gains, until the total capital loss is exhausted.

When you own a big winner, selling after Jan. 1 makes sense, especially if you can hold the security for a year and qualify for the lower capital gains tax rate.

Use your section 179 deduction

Buying that new laser technology? Use your annual Section 179 expense deduction for 2000. The tax law will allow you to immediately deduct up to $20,000 on capital assets purchased in 2000 instead of depreciating this equipment over its economic useful life. If you're planning equipment purchases that exceed the annual limit, spend $20,000 before year end and $20,000 in January. This effectively doubles your purchasing power. Otherwise, you'll be stuck depreciating the second $20,000 over the equipment's life instead of getting the Section 179 benefit.

Set up a retirement plan now

For most "qualified" retirement plans (the kind that Congress gives favorable tax treatment), you must adopt the plan prior to year end. If you can meet that deadline, the law allows you to take the expense for 2000, provided you fund the contribution to the plan by the extended due date of the return in 2001.

Make charitable contributions

Donate appreciated securities to take advantage of the tax deduction for the full fair market value of the securities at the date of contribution. If you sell the stock and donate the proceeds to the charity, you'll pay capital gains tax on the appreciation. By donating the securities, you avoid the capital gains tax.

Fund education ira accounts

You have until April 15 to fund traditional and Roth iras, but education iras must be funded by year end.

Make gifts before year end

Gift up to $10,000 per recipient to minimize transfer taxes at your death. You and your spouse may gift up to $20,000 if you elect gift-splitting.

Gift appreciated securities to a child in a custodial account, then sell the securities in the child's account. The capital gains rate of 10% will apply, rather than the 20% rate that would result if the securities were sold in the parents' account. This is because of the child's lower tax bracket.

It's important to remember that income taxes aren't a function of how much we earn, but how we earn it. Without proper planning, taxes just happen. Consult your financial or tax advisor before year end to so that you and your advisor have ample opportunity to rearrange your affairs to minimize your overall tax obligations.

Richard J. Alphonso, JD, CPA/PFS, M.S.T., and Anita S. Frank, CPA, are president and tax manager, respectively, of The Financial Advisory Group, Inc., in Houston. The Financial Advisory Group provides personalized fee-only financial planning, investment management and business consulting services.