As year-end approaches, we offer the following guidance and services to assist in your tax, liquidity and wind-down planning.


TIP #1:

Which M&A-Related Tax Forms to Expect, and When.

If you were a shareholder in a company that was sold in 2015, you will likely receive a tax form reporting the amount of proceeds that were distributed to you. In addition, you may receive additional tax forms related to companies sold prior to 2015 if you received proceeds from escrow releases or milestone payments. These proceeds are typically reported on IRS Form 1099-B, which, if required, must be sent to you by February 15, 2016.  However, if you were an employee of the company that was sold and your proceeds are required to be treated as compensation, such as distributions resulting from incentive stock options, cashed-out options, or management incentive plan bonuses, your proceeds would instead be reported on IRS Form W-2 which is due to you by February 1, 2016. If you do not receive the tax reporting documents you expect, please contact us at for assistance.



TIP #2:

Looking to Write Off a Portfolio Company Investment? Sell the Securities for $1 to Strengthen Your Tax Position or Wrap Up a Fund.

The position that a security is worthless for tax purposes may be strengthened if it is formally sold in an arms’-length transaction for a nominal amount. At the request of our clients, SRS Acquiom can formally purchase such securities for $1. This option may also allow for a speedier wrap-up of a fund if these are among the remaining assets.

For more information, read our related article, “Selling Residual Interests to Write Off Investment Losses” or contact



TIP #3:

For Foreign Escrows or Accounts,  is FBAR or Form 8938 Required? You May Need to File Both.

Shareholders in a deal with escrows held in accounts domiciled outside the U.S. may need to comply with Report of Foreign Bank and Financial Accounts (FBAR) regulations. In addition, the Internal Revenue Service now requires taxpayers to file Form 8938 if they hold foreign financial assets in excess of $50,000 at the end of their tax year or $75,000 anytime during their tax year.

Given the complexity and significant penalties possible with the FinCEN 114, FBAR regulations and Form 8938, we advise all shareholders to look at their escrows to determine whether any are held in foreign accounts, and to consult their tax and legal advisors as to whether either reporting requirement applies for both individual 1040 filers and for business entities. The IRS has published a comparison of FBAR and Form 8938 reporting requirements here.

For more information, read the related article, “Cross Border Transactions; Watch Out or FBAR,” or reference the IRS website for helpful resources: Form 8938FBAR Regulations



TIP #4:

An Audit Confirmation May Be Needed for Escrow and Holdback Positions. We Can Help.

As part of year-end accounting, auditors may require independent confirmation of escrow and holdback positions related to those reported on your financial statements. In addition to the reporting provided through SRS ComPort, we can provide written audit confirmations upon request. Please email requests to



TIP #5:

Changing Regulations May Affect Your M&A Escrow Accounts in 2016.  Explore Your Options Now.

New regulations, including Dodd-Frank and Basel III, designed to mitigate the systemic risks of the financial industry, are being phased in during 2016 and may present new challenges to M&A escrow accounts. Traditional M&A escrow investment options may no longer meet deal parties’ four investment criteria – principal protection, liquidity, administrative ease and positive yield – or might become unavailable altogether. These changes may also affect M&A escrow accounts established prior to 2016. During 2016, you may see lower yields on escrow bank deposits, even if prevailing interest rates rise, new or additional escrow administration fees, or you may experience loss of principal or restricted liquidity if your escrow is invested in institutional money market funds.

To learn more about how these new regulations may affect your proposed or existing M&A escrows, visit our website for alternative escrow solutions. We have options for buyers, target companies, shareholder representatives and their legal advisors that can mitigate the effects.



TIP #6:

Consider Liquidating Your Escrow Position to Lock In Immediate Value or Wind Up a Fund.

Shareholders in deals where SRS Acquiom is the shareholder representative may have the option to sell escrow holdings early, locking in value and allowing immediate distribution to investors. If you’re wrapping up a fund or seeking to accelerate recognition of loss or gain (e.g., if you have applicable offsetting losses), then selling your escrow interest could be the answer.

Contact for available options. Size and eligibility restrictions apply.


If you have questions related to specific year-end issues, our expert team is happy to help. Please contact our client support at 415-263-9018 or

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