Question: I plan on selling some over-the-counter stock given to me by my grandfather seven years ago. The stock is now worth about half what it was at the time of the gift.Can I take a capital loss on my tax return for the difference? Or do I have to find out what my grandfather paid when he bought the stock? If so, how?

Answer: To tackle the second question first: Yes, you must determine the original cost of the stock to your grandfather. If you know the date he bought the stock, the broker who handles the sale for you can get you the per-share price on that date.

If you don't know the date of purchase and the date of issue doesn't appear on the stock certificate (it usually does), then write to the transfer agent or registrar shown on the certificate. Either of these should be able to tell you the date of purchase or the date the certificate was issued.

(The issue date is likely to be around 30 days after the purchase date, but in the absence of more exact information it's as close as you can get and will serve the purpose.)

To answer the first question you need to know both the original cost basis and the fair market value on the date of the gift. If the latter is less than your grandfather's cost, then your basis for figuring gain on the sale is his cost basis.

But your basis for a loss is the value at the time of a gift. And here's where it gets complicated. If the proceeds from the sale are less than his cost but greater than the value when he gave you the stock, then you have neither a gain nor a loss to report.

On the other hand, if the value at the time of the gift is more than grandpa's basis, then your basis for calculating either gain or loss is his basis.

One further complication: If your grandfather paid gift tax when he gave you the stock, then the amount of the tax can be added to his original basis-but not to exceed the fair market value on the date of the gift.

Warning to all you grandfathers (or other donors) out there: When you make a gift of property, be sure to provide to the donee all of the pertinent facts and figures. Otherwise you may be giving a king-sized headache along with your well-intentioned gift.

Q. I have always used the standard deduction of my tax returns. Because of changing circumstances, it looks like I may be better off itemizing deductions this year. What steps do you advise for the person planning to itemize for the first time?

A: The first step is to become familiar with the various categories of expenses eligible for itemizing. The broad groups are medical expenses, interest, state and local taxes, charitable contributions, casualty losses, plus a variety of lesser items lumped together as "miscellaneous."

There are sub-groups in each category and, as you might expect under our complicated tax laws, a lot of restrictive rules. You can get the details from IRS Publication 17 (free at your local IRS office); from one of the annual tax books (available at most public libraries); or from my tax series that appeared in The Washington Post last February.

Then all you need to do is set up a file folder or 9x12 inch manila envelope marked "1979 tax data" into that folder or envelope put out every piece of paper that supports a transaction in any of the eligible categories.

If you lead a complicated life or are a person who enjoys organizing details, you might want a folder for each category. For most people, however, it will be a relatively easy chore to separate the whole package into the necessary groupings at tax time next spring.

Incidentally, every taxpayer should be doing this even if he or she doesn't expect to itemize deductions. An unexpected event in mid-year can suddenly make itemizing advantageous. There's always time enough to throw the supporting papers away at the end of the year if they are not needed.

Q: I have a substantial number of savings bonds bought many years ago. If I cash them in now, how do I compute the tax liability?

A: No problem. The agency that cashes the bonds for you will give you a statement showing both the original cost of the bonds and the redemption value. The difference is the accumulated interest-reportable as income on your federal return, but exempt from state income tax.