Company: FMFG
Filing Date: 2025-05-23
Form Type: S-1
Source: 0001437749-25-018314
Chunk: 21

Company: Farmers & Merchants Bancshares, Inc.
Filing Date: 2025-05-23
Form: S-1
Chunk 21
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 having received an additional distribution in the amount of that discount.

You will not recognize any gain or loss for Federal income tax purposes upon your receipt or transfer of shares previously credited to your Plan account, regardless of whether the shares are delivered or transferred at your request, upon your withdrawal from the Plan, or upon termination of the Plan. As a general rule, however, you will recognize gain or loss for Federal income tax purposes when you sell shares received under the Plan.

Information returns will be sent to each participant and to the Internal Revenue Service during each year. These returns will show the amount of dividends paid to a participant’s Plan account (i.e., Form 1099-DIV).

| 21. | When and how will gains and losses on shares be determined? |

A participant will realize a gain or loss whenever he or she sells shares purchased under the Plan. The amount of gain or loss will be the difference between the amount the participant receives for his or her shares in that sale and his or her adjusted tax basis for those shares. A participant’s adjusted tax basis is generally his or her cost for the shares acquired directly from us (including any discount), which, in the case of the Plan, will equal the “fair market value”, as defined for Federal income tax purposes, of the acquired shares on the date we pay the dividend.

In the case of foreign stockholders whose dividends are subject to United States income tax withholding, or domestic stockholders whose dividends are subject to United States backup withholding, the Administrator will invest in shares of common stock an amount equal to the dividends less the amount of tax that the Company is required by applicable law to withhold in each case. The regular statements of account confirming purchases made for such participants will indicate the amount of tax withheld.

| 22. | When does the holding period begin for purposes of determining gain or loss? |

The holding period for the shares sold and issued in connection with a dividend will begin on the day after the payment date for that dividend.

THE ANSWERS TO QUESTIONS NOS. 20 THROUGH 22 ARE ONLY SUMMARIES AND ARE BASED ON OUR UNDERSTANDING OF CURRENT FEDERAL INCOME TAX LAWS, WHICH ARE SUBJECT TO CHANGE. THESE SUMMARIES DO NOT PURPORT TO ADDRESS THE PARTICULAR CIRCUMSTANCES OF INDIVIDUAL PARTICIPANTS. MOREOVER, THEY DO NOT INCLUDE A DISCUSSION OF STATE OR LOCAL INCOME TAX LAW CONSEQUENCES OF PARTICIPATING IN THE PLAN. PARTICIPANTS SHOULD CONSULT THEIR OWN TAX