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Form 8725 (Rev. 12-2015) Page 2
General Instructions When To File Identifying number. If you are an
Section references are to the Internal File Form 8725 by the 90th day following individual, enter your social security
Revenue Code. receipt of any portion of the greenmail. If number. If you are a nonresident or
you need more time to file, use Form resident alien and you do not have and
Future Developments 7004, Application for Automatic are not eligible for a social security
For the latest information about Extension of Time To File Certain number, enter your individual taxpayer
developments related to Form 8725 and Business Income Tax, Information, and identification number (ITIN). Other filers
its instructions, such as legislation Other Returns, by the due date of Form should enter their employer identification
enacted after they were published, go to 8725. Form 7004 does not extend the number.
www.irs.gov/form8725. time for payment of tax. Tax Computation
Purpose of Form Where To File Line 1. Enter the net proceeds received
Use Form 8725 to report and pay the File Form 8725 at the following address: from the sale of the stock subject to the
excise tax.
50% excise tax imposed under section Internal Revenue Service Center
5881 on the gain or other income Cincinnati, OH 45999 Column 2(a). For each separate
realized on the receipt of greenmail acquisition of stock subject to the excise
(defined below). Greenmail is considered Rounding Off to Whole tax, enter the date acquired (for
received when the gain or other income Dollars example, the trade date for stock traded
on an exchange or over the counter).
is realized under your method of You may show money items on the See section 1223 for special rules on
accounting regardless of whether the return as whole dollars. To do so, drop determining the holding period of stock
gain or other income is recognized. any amount less than 50 cents and received in an exchange, for stock that
Definitions increase any amount from 50 cents has the same basis in whole or in part as
through 99 cents to the next higher it would have in the hands of another
Greenmail. The term “greenmail” means dollar. person, for stock subject to the “wash
any amount a corporation (or any person
acting in concert with a corporation) Amended Return sale” rules of section 1091, etc.
pays to a shareholder to directly or To amend a previously filed Form 8725, Column 2(c). The cost or other basis of
indirectly acquire its stock if: file a corrected Form 8725 and write stock is generally the cost of the stock
1. The shareholder held the stock (as “Amended” at the top of the form. plus purchase commissions. If you
determined under section 1223) for less inherited the stock, received it as a gift,
than 2 years before entering into the Attachments received it in a tax-free exchange, or re-
agreement to make the transfer, If more space is needed, attach separate acquired stock in a “wash sale”
2. At some time during the 2-year sheets to Form 8725. Be sure to put your transaction subject to the rules of
period ending on the date of acquisition, name and identifying number on each section 1091, you may not be able to
the shareholder, any person acting in sheet. use the actual cash cost as the basis. If
concert with the shareholder, or any you do not use cash cost, attach an
person related to either of them (see Signature explanation of your basis. Be sure to
Related person, later), made or See the instructions for the Signature adjust your basis by subtracting all the
threatened to make a public tender offer section of your federal income tax return. nontaxable distributions you received
before the sale. Also adjust your basis
for stock of the corporation, and Interest and Penalties for any stock splits. For more
3. The acquisition was made under an Interest. Interest is charged on taxes not information, see Pub. 551, Basis of
offer that was not made on the same paid by the due date at a rate Assets.
terms to all shareholders. determined under section 6621. Line 4. If you realized any other income
Note. Payments made in connection Late filing of return. A penalty of 5% a that is subject to the excise tax, enter
with (or in transactions related to) an month or part of a month, up to a the amount of the income on line 4.
acquisition are treated as payments maximum of 25%, is imposed on the net Line 5. You must include the recognized
made for the acquisition of the stock. amount due if Form 8725 is not filed portion of the amount on line 5 as
Indirect acquisition of stock. Stock is when due. income on your federal income tax
deemed to have been acquired indirectly Late payment of tax. Generally, the return.
by the issuing corporation if such stock penalty for not paying tax when due is ½ Line 6. You may not claim a deduction
is sold to an entity related to the issuing of 1% of the unpaid amount, up to a on your federal income tax return for the
corporation (for example, a controlled maximum of 25%, for each month or amount shown on line 6.
subsidiary). part of a month the tax remains unpaid. If you filed Form 7004, enter the
Public tender offer. The term “public The penalty is imposed on the net Line 7.
tender offer” means any offer to amount due. amount of tax paid, if any, when you filed
purchase or otherwise acquire stock or that form.
assets in a corporation if the offer was Specific Instructions Line 8. You must pay the tax due in full
when you file Form 8725. Make your
required to be filed or registered with any Name and address. Enter the name check or money order payable to the
federal or state agency regulating shown on your most recently filed “United States Treasury.” Write your
securities. federal income tax return. Include the name, address, identifying number, and
Related person. A person is considered room, suite, apartment, or other unit “Form 8725” on the check or money
related to another person if the number after the street address. If the order.
relationship between such persons Post Office does not deliver mail to the
would result in losses disallowed under street address and the taxpayer has a Line 9. The IRS will refund the amount
section 267 or 707(b). P.O. box, show the box number instead on line 9 if you owe no other taxes.
Who Must File of the street address.
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.
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