As year-end approaches, here are a few planning tips you may find useful.

TIP #1:

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

If you were a securityholder in a company that was sold in 2016, 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 2016 if you received post-closing 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, 2017.  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, bonuses, or management incentive/carve-out plans, your proceeds would instead be reported on IRS Form W-2 which must be mailed to you by January 31, 2017. 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 arm’s 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.

Securityholders 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 unmarried (or married filing separately) 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. For married taxpayers filing jointly, the amounts are $100,000 and $150,000, respectively.

Given the complexity and significant penalties possible with the FinCEN 114, FBAR regulations and Form 8938, we advise all securityholders 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 8938, FBAR Regulations



TIP #4:

You May Need an Audit Confirmation 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 2017.  Explore Your Options Now.

New regulations, including those stemming from the Dodd-Frank Act and Basel III reform measures, designed to mitigate the systemic risks of the financial industry, are being phased in and may present new challenges to M&A escrow accounts. Traditional M&A escrow investment options may no longer meet deal parties’ primary 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 2017. You may see begin to see lower yields on escrow bank deposits, even if prevailing interest rates rise, new or additional escrow administration fees, or the deposit is now exposed to new risks, including loss of principal or restricted liquidity if your escrow is invested in an institutional money market fund.

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.


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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