FirstMerit completed its merger with Huntington Bancshares on 8/16/16 for cash and Huntington Bancshares stock.
The SEC filing (S-4A) for this merger was found through the Huntington Bancshares web site.
This merger is a cash-plus-stock reorganization. All the information below is from the information available from the Form S-4A filed with the SEC. Be aware that the document filed with the SEC explicitly states that all tax consequences are not completely knowable at the time of the merger. Depending on certain circumstances, the cash received may be treated as a dividend. This treatment is unusual for small retail holders of the involved companies, but we will update these steps, if needed, to accomodate any changes.
If you have made any entries for this transaction in the Club Accounting software, you should delete them, and then use the steps below.
Use the Merger with cash transaction.
The tax status of this merger is subject to change if the IRS challenges the company interpretation of the tax code as it relates to this merger or if the analysis the conditions mentioned in form S-4A require a change. It may be necessary to change the entries for this merger at a later date.
In Merger with cash transactions, realizedcapital gains and the cost basis of the new shares have a component dependent on the price per share chosen in the entry screens. In our experience brokers tend to use the price per share published by the companies on their websites in their guidance to shareholders. If the companies publish guidance with a share price, we use that share price in our instructions to minimize possible differences between the accounting records and broker information. In cases where no guidance is available, we will choose the lower of the opening or closing price on the effective date. Either of these prices is acceptable to the IRS and by choosing the lower price some realized capital gains will be deferred to a later date. However, there is always the chance the price we choose will not be the price chosen by your broker. The gain from the merger and cost basis of the new shares recorded in your accounting records will then differ from your broker information. Because of the lack of detail in the tax code, both our choice and your broker’s choices would be reasonable estimates of market value for the shares received. Your records are NOT incorrect because they differ from your broker. Tax return forms do have specific areas to report these usually small differences. Our tax printer software handles these adjustment entries automatically in the normal operation of the software.