Form 8725 Excise Tax on Greenmail

8725

Excise Tax on Greenmail

Form
(Rev. December 2008)

OMB No. 1545-1086
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Department of the Treasury
Internal Revenue Service

See instructions below.
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Date of initial receipt of greenmail
Name of person receiving greenmail

Please
Type
or
Print

Identifying number

Number, street, and room or suite no. (If a P.O. box, see instructions.)

City or town, state, and ZIP code

©

A

Enter the date you entered into the agreement to transfer the stock

B

Enter the name of the corporation whose stock is being acquired from you

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Tax Computation (see instructions)
1

1

Net sales price

2

(a) Date acquired

(b) Number of shares

(c) Cost or other basis

a
b
c
d
e
f Column (b) total
2g
3
4
5
6
7

g
3
4
5
6
7

Column (c) total
Gain. Subtract line 2g from line 1. If zero or less, enter -0Other income
Total gain and other income. Add lines 3 and 4. See instructions
Tax. Multiply line 5 by 50% (.50)
Less: Tax paid with Form 7004

8

Tax due. Subtract line 7 from line 6. If zero or less, enter -0-

8

9

Overpayment. Subtract line 6 from line 7

9

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief,
it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

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Signature(s)

Paid
Preparer’s
Use Only

Preparer’s
signature

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Date

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Firm’s name (or
yours if self-employed),
address, and ZIP code

Date

Check if
self-employed

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Definitions

Section references are to the Internal
Revenue Code.

Greenmail. The term “greenmail” means any
amount a corporation (or any person acting in
concert with a corporation) pays to a
shareholder to directly or indirectly acquire its
stock if:
1. The shareholder held the stock (as
determined under section 1223) for less than
2 years before entering into the agreement to
make the transfer,
2. At some time during the 2-year period
ending on the date of acquisition, the

Use Form 8725 to report and pay the 50%
excise tax imposed under section 5881 on
the gain or other income realized on the
receipt of greenmail (defined below).
Greenmail is considered received when the
gain or other income is realized under your
method of accounting regardless of whether
the gain or other income is recognized.

Preparer’s SSN or PTIN

EIN
Phone no. (

General Instructions
Purpose of Form

Title (if any)

For Privacy Act and Paperwork Reduction Act Notice, see back of form.

)

shareholder, any person acting in concert
with the shareholder, or any person related to
either of them (see Related person on page
2), made or threatened to make a public
tender offer for stock of the corporation, and
3. The acquisition was made under an offer
that was not made on the same terms to all
shareholders.
Note. Payments made in connection with (or
in transactions related to) an acquisition are
treated as payments made for the acquisition
of the stock.

Cat. No. 64873D

Form

8725

(Rev. 12-2008)

Form 8725 (Rev. 12-2008)

Page

Indirect acquisition of stock. Stock is
deemed to have been acquired indirectly by
the issuing corporation if such stock is sold
to an entity related to the issuing corporation
(for example, a controlled subsidiary).
Public tender offer. The term “public tender
offer” means any offer to purchase or
otherwise acquire stock or assets in a
corporation if the offer was required to be
filed or registered with any federal or state
agency regulating securities.
Related person. A person is considered
related to another person if the relationship
between such persons would result in losses
disallowed under section 267 or 707(b).

return. Include the suite, room, apartment, or
other unit number after the street address. If
the Post Office does not deliver mail to the
street address and the taxpayer has a P.O.
box, show the box number instead of the
street address.

Who Must File

Line 1. Net sales price. Enter the net
proceeds received from the sale of the stock
subject to the excise tax.
Column 2(a). Date acquired. For each
separate acquisition of stock subject to the
excise tax, enter the date acquired (for
example, the trade date for stock traded on
an exchange or over the counter). See section
1223 for special rules on determining the
holding period of stock received in an
exchange, for stock that has the same basis
in whole or in part as it would have in the
hands of another person, for stock subject to
the “wash sale” rules of section 1091, etc.
Column 2(c). Cost or other basis. The cost
or other basis of stock is generally the cost of
the stock plus purchase commissions. If you
inherited the stock, received it as a gift,
received it in a tax-free exchange, or
re-acquired stock in a “wash sale” transaction
subject to the rules of section 1091, you may
not be able to use the actual cash cost as the
basis. If you do not use cash cost, attach an
explanation of your basis. Be sure to adjust
your basis by subtracting all the nontaxable
distributions you received before the sale.
Also adjust your basis for any stock splits.
For more information, see Pub. 551, Basis of
Assets.
Line 4. Other income. If you realized any
other income that is subject to the excise tax,
enter the amount of the income on line 4.

You must file Form 8725 if you are liable for
the excise tax on greenmail under section
5881. File a separate Form 8725 for each
agreement made to transfer stock.

When To File
File Form 8725 by the 90th day following
receipt of any portion of the greenmail. If you
need more time to file, use Form 7004,
Application for Automatic Extension of Time
To File Certain Business Income Tax,
Information, and Other Returns, by the due
date of Form 8725. Form 7004 does not
extend the time for payment of tax.

Where To File
File Form 8725 with the Internal Revenue
Service Center, Cincinnati, OH 45999.

Rounding Off to Whole Dollars
You may show money items on the return as
whole dollars. To do so, drop any amount
less than 50 cents and increase any amount
from 50 cents through 99 cents to the next
higher dollar.

Amended Return
To amend a previously filed Form 8725, file a
corrected Form 8725 and write “Amended” at
the top of the form.

Attachments
If more space is needed, attach separate
sheets to Form 8725. Be sure to put your
name and identifying number on each sheet.

Signature
See the instructions for the Signature section
of your federal income tax return.

Interest and Penalties
Interest. Interest is charged on taxes not
paid by the due date at a rate determined
under section 6621.
Late filing of return. A penalty of 5% a
month or part of a month, up to a maximum
of 25%, is imposed on the net amount due if
Form 8725 is not filed when due.
Late payment of tax. Generally, the penalty
for not paying tax when due is 1⁄ 2 of 1% of
the unpaid amount, up to a maximum of
25%, for each month or part of a month the
tax remains unpaid. The penalty is imposed
on the net amount due.

Specific Instructions
Name and address. Enter the name shown
on your most recently filed federal income tax

Identifying number. If you are an individual,
enter your social security number. If you are a
nonresident or resident alien and you do not
have and are not eligible for a social security
number, enter your individual taxpayer
identification number (ITIN). Other filers
should enter their employer identification
number.

Tax Computation

Line 5. Total gain and other income. You
must include the recognized portion of the
amount on line 5 as income on your federal
income tax return.
Line 6. Tax. You may not claim a deduction
on your federal income tax return for the
amount shown on line 6.
Line 7. Tax paid with Form 7004. If you filed
Form 7004, enter the amount of tax paid, if
any, when you filed that form.
Line 8. Tax due. You must pay the tax due in
full when you file Form 8725. Make your
check or money order payable to the “United
States Treasury.” Write your name, address,
identifying number, and “Form 8725” on the
check or money order.
Line 9. Overpayment. The IRS will refund the
amount on line 9 if you owe no other taxes.
Privacy Act and Paperwork Reduction Act
Notice. We ask for the information on this
form to carry out the Internal Revenue laws of
the United States. You are required to give us
the information. We need it to ensure that you
are complying with these laws and to allow
us to figure and collect the right amount of
tax.

2

In addition, the Privacy Act requires that
when we ask you for information we must
first tell you our legal right to ask for the
information, why we are asking for it, and
what could happen if we do not receive it and
whether your response is voluntary, required
to obtain a benefit, or mandatory under the
law.
Our authority to ask for information is
section 6001, 6011, and 6012(a) and their
regulations, which require you to file a return
or statement with us for any tax for which you
are liable. Your response is mandatory under
these sections. Section 6109 requires that
you provide your social security number or
employer identification number on what you
file. This is so we know who you are, and can
process your return and other papers. You
must fill in all parts of the tax form that apply
to you.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB control
number. Books or records relating to a form
or its instructions must be retained as long as
their contents may become material in the
administration of any Internal Revenue law.
Generally, tax returns and return information
are confidential, as required by section 6103.
However, section 6103 allows or requires
the Internal Revenue Service to disclose or
give the information shown on your tax return
to others as described in the Code. For
example, we may disclose your tax
information to the Department of Justice to
enforce the tax laws, both civil and criminal,
and to cities, states, the District of Columbia,
U.S. commonwealths or possessions, and
certain foreign governments to carry out their
laws. We may also disclose this information
to federal and state or local agencies to
enforce federal nontax criminal laws and to
combat terrorism.
Please keep this notice with your records. It
may help you if we ask you for other
information. If you have any questions about
the rules for filing and giving information,
please call or visit any Internal Revenue
Service office.
The time needed to complete and file this
form will vary depending on individual
circumstances. The estimated average time
is:
Recordkeeping
5 hr., 30 min.
Learning about the law
or the form
42 min.
Preparing and sending
the form to the IRS
49 min.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler, we
would be happy to hear from you. You can
write to the Internal Revenue Service, Tax
Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution
Ave., NW, IR-6526, Washington, DC 20224.
DO NOT send Form 8725 to this address.
Instead, see Where To File above.