Donating Stock Can Benefit You, the Navy League

By VERONICA BRANDON
NLUS Life Member

There are many advantages to donating to one of your favorite charities. For instance, donating stock to the Navy League can help you avoid paying capital gains taxes on appreciated securities and receive a charitable income tax deduction equal to the fair market value of the securities if it has been held longer than one year.

“This is a wonderful way to demonstrate your patriotic support to the men and women of the American sea services,” states National President Sheila M. McNeill.

“Making a gift of securities is easy and you can divest your portfolio of under-performing stocks and preserve your cash for other important needs while helping the Navy League of the United States,” said Ronald Weeks, chairman of the Navy League Foundation Board of Trustees.

Giving to the Navy League can be beneficial for you. A significant tax deduction can be earned by donating from your investment portfolio instead of writing a check. If you donate appreciated stocks instead of cash, you get a deduction for the stock’s full market value while avoiding capital gains tax on the appreciation.

The donation of stock is useful in the following scenario. You want to donate $10,000 to your favorite charity. You made a stock investment several years ago for $5,000 that has appreciated in value to $10,000. If you were to sell the stock and donate the proceeds to charity, you would first pay $1,000 in capital gains tax (20 percent capital gains tax on the $5,000 in appreciated value) leaving the charity with a $9,000 donation.

A different strategy could be better for both you and the Navy League — give the appreciated stock directly to the Navy League. The Navy League is able to sell the stock without paying capital gains taxes and directly receives your $10,000 donation because it is a tax-exempt entity. You get a deduction for the fair market value (FMV) of your donated stock and avoid paying tax on the appreciated value. FMV is calculated by averaging the high and low value of the stock on the day of the donation.

“Your charitable deduction is limited to 30 percent of your adjusted gross income, but you may use any remaining deductions over the next five years,” Weeks said.

Mutual funds also can be donated to some charities, but the charity must have, or open, an account with the fund so your donation can be directly transferred. Ask the fund to transfer the funds you paid the least for to maximize your tax savings. Those shares will usually have accumulated the most capital gains.

Your stock property must have been held for at least a year. If the stock has not been held for a year, the deduction is limited to the value you paid for the stock because it is ordinary income property. The Navy League will acknowledge your gift in writing, and provide you with a record of the asset’s value on the transfer date.

“Transferring stock is easy,” Weeks said. “If you have the certificates, most charities can tell you how to send the stock certificates and stock power authorizing the change in ownership. The charity also should be able to provide your broker the information he needs to wire transfer the stocks to the charity’s brokerage account. Remember that you cannot claim the donation as a deduction until the properly endorsed securities are given to the charity or its agent.”

Donors to the Navy League of the United States are valued and appreciated. Your contribution not only shows your loyalty to your country, it allows the Navy League to continue to advocate superior sea power to safeguard U.S. national security, protect American economic interests and ensure freedom of the seas.

For more information on supporting the Navy League, please contact the Navy League Foundation at (800) 356-5760, or by e-mail at development@navyleague.org.