Losing stocks can feel like a lump of coal in your stocking, but don't be a scrooge about it. Instead, consider gifting them.

Giving stocks as a holiday gift is one way to clear out your portfolio and pass on a real asset to younger folks who have more time to wait for the market to recover. And with stock prices lower, you can give more now without paying gift taxes. You can also gift shares of a mutual fund. While it's fairly straightforward to gift shares, as we explain below, keep in mind you might want to consult a tax advisor depending on the size and complexity of your estate.

Pros

One of the main benefits of gifting is that it helps you whittle down your estate, which heirs might otherwise have to pay taxes on. Under current tax laws, you can give a gift valued at up to $12,000 each year to any number of people without paying taxes on it.

Now look at your portfolio. If you own shares of, say, General Electric (GE), they're down more than 50% from a year ago. This means that at about $16 each, you can gift 750 shares this year and pay no taxes, compared with about 340 shares last year. Whoever you give the shares to pays no taxes until they sell them. Meanwhile, they're getting the shares at the lowest price they've been in years and have a chance to sell for a hefty profit if GE shares rebound.

"There's a good opportunity now for people who want to make gifts of stock," says Gary Hager, president of financial-planning firm Integrated Wealth Management in Edison, N.J. "As you look at your portfolio, pick stocks that have depreciated the most but have the highest expectations for recovery."

Cons

On the flip side, be mindful of how gifting stocks can affect your capital-gains tax liabilities.

Sometimes, it can make more sense to gift winning stocks in order to reduce the amount of unrealized capital gains in your portfolio. "This year, not many people have a lot of capital gains to offset, so to gift shares doesn't make as much sense" if that's your aim, says Steven Roge, a portfolio manager at investment advisor R.W. Roge & Co.

If you do have capital gains to offset and still want to gift stocks this year, Roge recommends first selling the losing stocks that you're thinking about gifting in order to realize the loss. Then, you can buy the stock back a month or so later to avoid wash sale restrictions and gift it then, Roge says. Chances are the price will still be low.

How does it work?

To gift shares you currently own, just call your broker and have them transfer the shares to an account in the recipient's name. Usually, there aren't any fees for this, and you should be able to do this right up until Christmas, or anytime after for other occasions like birthdays. You can also just buy shares and then gift them, via your broker, although you'll probably pay transaction costs.

Finally, there are companies such as OneShare.com that allow you to buy a single share. It's more for fun than for investment or financial-planning purposes, but it's a unique gift all the same. OneShare also sells you the actual stock certificate to go up on the wall, a novelty nowadays as many investors only own shares electronically.