Tax Consequences of the BB&T-Susquehanna Merger - Rodgers & Associates

Tax Consequences of the BB&T‑Susquehanna Merger

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.