There are a number of different reasons you might want to reset your Skylanders.
Whatever your reason may be, here's how it works…
Once you place your Skylander on the Portal, you need to access the Skylander menu. This can be done by pressing the:
Then click on Reset. Finally, click on Yes to finalize the process.
Your Skylander will now be reset to Level 1 with 0 Gold. You will have to buy all the upgrades again.
Your Skylander will now be added to your Collection and you will receive the Elemental Bonus for adding another Skylander to your Collection.
NOTE: If you just want to add the Skylander to your Collection without losing its current Stats, you want to use the Transfer Ownership option.
The instructions above are for the newest game, Skylanders SuperChargers. For more details on resetting Skylanders in Skylanders Trap Team, go here.