Frequently Asked Questions About Securities Gifts

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Following are frequently asked questions that apply to gifts of securities. While every effort has been made to ensure their accuracy, the answers are of general application and are not intended to be a substitute for legal, tax, or investment advice.

Q: What types of securities can I donate?

We accept publicly-traded stocks, bonds and other debt instruments, mutual funds or listed options. These can be held in an account at a brokerage firm, in physical certificate form, or that were purchased directly from the issuer.

Q: What do you mean when you say "appreciated securities"?

If they are securities you purchased, this simply means securities that are worth more than you paid for them and would result in a taxable gain if you sold them.

Q: Is there a minimum gift size that I should consider when donating securities?

Although the USS Midway Museum appreciates every gift it receives, we also are mindful of the fact that you want as much of your gift as possible to be used for our charitable mission. Although we process securities gifts as efficiently as possible, there are certain expenses that are unique to them. For these reasons we suggest you consider a minimum gift of $1,000.

Q: Can I simply direct my financial advisor to sell my securities and donate the proceeds to the USS Midway Museum?

You can but it might not be a good idea. Here’s why. In order for you to avoid capital gains on the contribution of appreciated stocks or other securities, they must be transferred to the charitable donee before they are sold. Otherwise, you will realize the capital gain personally.

Conversely, securities that have declined in value since you purchased should generally be sold prior to contributing them. In most cases, you would be better off selling the securities, claiming the capital loss that you can use against other capital gains, and donating the cash proceeds from the sale.

Again, we suggest you consult your investment and tax advisors to determine the best securities to donate. 

Q: Do I need to contact my financial advisor to assist with the transfer the securities to the USS Midway Museum?

Although we always encourage donors to consult their advisors to assist in the selection of the securities to donate, our online securities donation tool will enable you to produce a customized document that you simply print, sign, and return to our Gift Processing Center. We will then have the securities transferred on your behalf. This will save both your and your advisor a tremendous amount of time. In addition, you can check a box in our online securities donation tool and we will notify your advisor that you making a gift.

Q: How long will it take for my gift to reach the USS Midway Museum?

The answer to that question depends on the type of securities you donate and how you hold them. For example, stock you hold in a brokerage account is most easily tanferred and processed because in most cases we can coordinate the transfer by fax and phone. Depending on how quickly the firm responds to our request for transfer, this can take just a few days. 

Securities you hold in certificate form take a few days longer because you have to send them to us by mail. And finally, mutual funds purchased directly from a mutual fund company may take a little longer to process because we might have to open a new account in our name to receive and liquidate them.

Q: What general income tax guidelines should I follow?

First, consider giving securities from your portfolio that have the greatest appreciation. That way, you’ll avoid the greatest amount of capital gain. 

Second, consider giving securities such as stocks you have owned for at least one year. Because they will be considered long-term capital property, you can claim an income tax charitable deduction for their full fair market value.

If you donate stocks you have owned less than one year, they will be considered short-term capital gain property. If you sell these securities, you gains are subject to tax at ordinary income tax rates. If you donate them, you will avoid this tax; however, your deduction will be limited to the lesser of their fair market value and the amount you paid for them. 

We recommend you consult your tax advisors to determine the best assets to donate.

Q: What about securities I received as gift or via inheritance?

Securities received by gift or inheritance can also be appreciated and therefore make excellent candidates for charitable giving. If you received securities as a gift from a living person, you take on their cost basis and holding period. For example, a family member gave you stock that he or she purchased for $1,000 and is worth $10,000 when you receive it. If you sell this stock, you will realize a capital gain of $9,000.Furthermore, in detemining if the gain is considered short-term or long-term, you will use the date they purchased the securities.

If you inherited securities, your cost basis will be the value of the securities on the decedent's death. Therefore, if the securities you received have increased in value since that time, they might also be ideal for charitable giving.

Q: What if I think the securities I am donating are still a good investment?

This is a great question. If you have a choice between giving cash or highly appreciated securities, consider donating the securities even if you think they are still a good investment. Then use the cash you would have donated to purchase new securities. As long as you have held the securities you donate at least one year, you will enjoy the same tax deduction as for a cash gift (i.e., full fair market value) and will receive a new tax basis in your newly purchased securities equal to the new purchase price.

Q: Does the "wash sale rule" apply to securities I have donated?

First, let's review the rule. The wash sale rule prevents you from claiming a loss on a sale of stock if you buy replacement stock within the 30 days before or after the sale. If you donate appreciated securities to the USS Midway Museum and then repurchase the same securities the very next day, you will still avoid gain on the donated securities and enjoy and brand new cost basis equal to the purchase price of the newly purchased securities. However, as well mentioned earlier, if you are considering donating securities that have declined in value since you purchased them, it is better to sell those securites and donate the cash proceeds so you can claim the loss. In that case, repurchasing the same securities within 30 days would bring the wash sale rule into effect.

Q: Are there any securities I should avoid giving or to which special tax rules apply?

Yes, for example, special tax rules apply to listed options contracts and U.S. Savings Bonds. 

In the case of listed options, capital gains are considered 60% long-term and 40% short-term regardless of how long you have held the contract. Therefore, you deduction will be reduced by the short-term portion.

Donating U.S. Savings Bonds during your lifetime will result in the unrealized interest being taxed to your personally. For this reason, you should avoid donating them while you are alive. Conversely, U.S. Savings Bonds are an excellent choice for funding charitable gifts through your estate plan. If you own U.S. Savings Bonds, we suggest you consult with your estate planning advisors to include a provision in your estate plan that directs these types of assets to charity.

Q: What if I am a corporate insider and own stock that is restricted under SEC Rule 144 or 145? Can I donate restricted stock?

Yes. As a general rule, since the USS Midway Museum is not considered an insider, it will be able to sell the securities even if you donate them within the restriction period. Since restricted stock is usually held in certificate form, you will simply complete our online questionnaire, print the Assignment Separate from Certificate, sign it, and return it by U.S. Mail it to our Gift Processing Center. You will also send the stock certificate to us in a separate envelope. We will then work directly with the shareholder relations department of the issuer to have new shares issued in the name of the USS Midway Museum with the restriction lifted.

Q: What if I own stock in certificate form and want to donate fewer shares than represented on the certificate?

Simple complete our online questionnaire, print the document, sign if and return it to our Gift Processing Center along with the stock certificate in a separate envelope. Your gift will be deemed complete on the date your mail both documents. We will then present the certificate to the issuer with instructions to issue new shares in the name of the USS Midway Museum and a new certificate in your name for the remaining shares. The issuer will then send the new certificate to you.

Other Questions?

If you have other questions and for further assistance, please use our Contact Us page. We're always here to help!

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