Considerations for 2017 Year-End Planning

By SRS Acquiom

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 2017, 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 2017 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, 2018. 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, 2018. If you a foreign securityholder, you might receive IRS Form 1042-S, which is used to report certain types of proceeds paid to foreign persons including non-resident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts that are subject to income tax withholding. Form 1042-S must be mailed to you by March 15, 2018.

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 the 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.

TIP #4: You May Need an Audit Confirmation for Escrow and Holdback Positions. SRS Acquiom 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 Acquiom ComPort™, written audit confirmations may be requested by emailing

TIP #5: Changing Regulations May Affect Your M&A Escrow Accounts in 2018. 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 2018.

To learn more about how these new regulations may affect your proposed or existing M&A escrows, visit our website.

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


Acquiom® and SRS® are registered trademarks or trademarks of SRS Acquiom LLC or its affiliates. AXA Equitable Life Insurance Company is not affiliated with Acquiom Financial LLC or SRS Acquiom LLC.  Acquiom Financial does not make recommendations, provide investment advice, or determine the suitability of any security for any particular person or entity.

Guarantees of principal protection are based on the claims paying ability of AXA Equitable Life Insurance Company (New York, NY). Liquidity limitations can apply if early termination is requested. Crediting rate may change in limited defined circumstances.


"AXA" is the brand name of AXA Equitable Financial Services, LLC and its family of companies, including AXA Equitable Life Insurance Company (NY,NY), MONY Life Insurance Company of America (AZ stock company, administrative office: NY,NY), AXA Advisors, LLC (member FINRA, SIPC), and AXA Distributors, LLC (member SIPC). AXA S.A. is a French holding company for a group of international insurance and financial services companies, including AXA Equitable Financial Services, LLC. The obligations of AXA Equitable Life Insurance Company and MONY Life Insurance Company of America are backed solely by their claims-paying ability.

© 1999-2019 AXA Equitable Life Insurance Company

1290 Avenue of the Americas, New York, NY 10104

Image used for Space here