Tax Consequences of the BB&T-Susquehanna Merger

There can be very large differences between how different mergers are treated for tax purposes.

Posted on

If you were a Susquehanna shareholder, you recently got a front-row seat to the consolidation that’s been happening in the banking sector for the past 30 years (The number of banks in the US peaked in 1984 when there were 14,496 banks, in 2014 there were 5,643 and just in case you were curious, the number bank branches increased over that same period of time from 42,717 to 82,613). On July 31, 2015 shareholders of Susquehanna became eligible to receive $4.05 a share in cash as well as 0.253 shares of BB&T common stock for each share of Susquehanna common stock.

We have a number of clients who were former Susquehanna employees and are now wondering how the merger needs to be treated for tax purposes.

There can be very large differences between how different mergers are treated for tax purposes, so one thing that companies involved in mergers do is put together a document that helps shareholders understand how their cost basis should be calculated. Just a warning, this document is not for the faint of heart. It’s a lot of math, a big part of it is written in legalese, and it’s fairly complicated. The document is loaded with disclosures about consulting your tax advisor and about how there may be different ways to calculate your gain or loss, and I would second all of those disclosures. That being said, section 16 of this document provides a description of the calculation for your change in cost basis.

Here’s a link to the section of BB&T’s website where this form can be accessed. Click the document that says BBT-SUSQ – Form 8937.

By following the steps in the worksheet it will show you what portion of your cost basis in Susquehanna should be attributed to the new BB&T shares, how much of a gain you’ll need to take on your taxes this year, and how much of a gain you’ll need to report on the sale of fractional shares.

Will Your Money Last Through Retirement?

No one wants to run out of money. But without goals and a solid plan,
how can you know for sure whether you’re on the right track?

Will I be able to maintain my current lifestyle?

What will my monthly income be in retirement?

Can I protect my hard-earned savings and still
have the income I want?

Rodgers & Associates answers questions like these every day.

Get Personalized Answers
2025 Lititz Pike, Lancaster, PA 17601
Phone: 717-560-3800, Toll-Free: 888-876-3437