Form 8725 Excise Tax on Greenmail

1. 8725 Excise Tax on Greenmail
Form
OMB No. 1545-1086
(Rev. December 2008)
See instructions below.
Department of the Treasury
Internal Revenue Service
Date of initial receipt of greenmail
Name of person receiving greenmail Identifying number
Please
Number, street, and room or suite no. (If a P.O. box, see instructions.)
Type
or
Print 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
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
g Column (c) total
3
3 Gain. Subtract line 2g from line 1. If zero or less, enter -0-
4
4 Other income
5
5 Total gain and other income. Add lines 3 and 4. See instructions
6
6 Tax. Multiply line 5 by 50% (.50)
7
7 Less: Tax paid with Form 7004
8
8 Tax due. Subtract line 7 from line 6. If zero or less, enter -0-
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.
Signature(s) Date Title (if any)
Date Preparer’s SSN or PTIN
Preparer’s Check if
Paid signature self-employed
Preparer’s Firm’s name (or EIN
Use Only yours if self-employed),
Phone no. ( )
address, and ZIP code
shareholder, any person acting in concert
Definitions
General Instructions
with the shareholder, or any person related to
Greenmail. The term “greenmail” means any
Section references are to the Internal
either of them (see Related person on page
amount a corporation (or any person acting in
Revenue Code.
2), made or threatened to make a public
concert with a corporation) pays to a
Purpose of Form tender offer for stock of the corporation, and
shareholder to directly or indirectly acquire its
3. The acquisition was made under an offer
Use Form 8725 to report and pay the 50% stock if:
that was not made on the same terms to all
excise tax imposed under section 5881 on
1. The shareholder held the stock (as
shareholders.
the gain or other income realized on the
determined under section 1223) for less than
receipt of greenmail (defined below). Note. Payments made in connection with (or
2 years before entering into the agreement to
Greenmail is considered received when the in transactions related to) an acquisition are
make the transfer,
gain or other income is realized under your treated as payments made for the acquisition
2. At some time during the 2-year period
method of accounting regardless of whether of the stock.
ending on the date of acquisition, the
the gain or other income is recognized.
8725
For Privacy Act and Paperwork Reduction Act Notice, see back of form. Cat. No. 64873D Form (Rev. 12-2008)

2. 2
Form 8725 (Rev. 12-2008) Page
Indirect acquisition of stock. Stock is return. Include the suite, room, apartment, or In addition, the Privacy Act requires that
deemed to have been acquired indirectly by other unit number after the street address. If when we ask you for information we must
the issuing corporation if such stock is sold the Post Office does not deliver mail to the first tell you our legal right to ask for the
to an entity related to the issuing corporation street address and the taxpayer has a P.O. information, why we are asking for it, and
(for example, a controlled subsidiary). box, show the box number instead of the what could happen if we do not receive it and
street address. whether your response is voluntary, required
Public tender offer. The term “public tender
to obtain a benefit, or mandatory under the
offer” means any offer to purchase or Identifying number. If you are an individual, law.
otherwise acquire stock or assets in a enter your social security number. If you are a
Our authority to ask for information is
corporation if the offer was required to be nonresident or resident alien and you do not
section 6001, 6011, and 6012(a) and their
filed or registered with any federal or state have and are not eligible for a social security
regulations, which require you to file a return
agency regulating securities. number, enter your individual taxpayer
or statement with us for any tax for which you
identification number (ITIN). Other filers
Related person. A person is considered
are liable. Your response is mandatory under
should enter their employer identification
related to another person if the relationship
these sections. Section 6109 requires that
number.
between such persons would result in losses
you provide your social security number or
disallowed under section 267 or 707(b).
Tax Computation employer identification number on what you
Who Must File file. This is so we know who you are, and can
Line 1. Net sales price. Enter the net
process your return and other papers. You
proceeds received from the sale of the stock
You must file Form 8725 if you are liable for
must fill in all parts of the tax form that apply
subject to the excise tax.
the excise tax on greenmail under section
to you.
5881. File a separate Form 8725 for each Column 2(a). Date acquired. For each
You are not required to provide the
agreement made to transfer stock. separate acquisition of stock subject to the
information requested on a form that is
excise tax, enter the date acquired (for
When To File subject to the Paperwork Reduction Act
example, the trade date for stock traded on
unless the form displays a valid OMB control
an exchange or over the counter). See section
File Form 8725 by the 90th day following
number. Books or records relating to a form
1223 for special rules on determining the
receipt of any portion of the greenmail. If you
or its instructions must be retained as long as
holding period of stock received in an
need more time to file, use Form 7004,
their contents may become material in the
exchange, for stock that has the same basis
Application for Automatic Extension of Time
administration of any Internal Revenue law.
in whole or in part as it would have in the
To File Certain Business Income Tax,
Generally, tax returns and return information
hands of another person, for stock subject to
Information, and Other Returns, by the due
are confidential, as required by section 6103.
the “wash sale” rules of section 1091, etc.
date of Form 8725. Form 7004 does not
extend the time for payment of tax. However, section 6103 allows or requires
Column 2(c). Cost or other basis. The cost
the Internal Revenue Service to disclose or
or other basis of stock is generally the cost of
Where To File give the information shown on your tax return
the stock plus purchase commissions. If you
File Form 8725 with the Internal Revenue to others as described in the Code. For
inherited the stock, received it as a gift,
Service Center, Cincinnati, OH 45999. example, we may disclose your tax
received it in a tax-free exchange, or
information to the Department of Justice to
re-acquired stock in a “wash sale” transaction
Rounding Off to Whole Dollars enforce the tax laws, both civil and criminal,
subject to the rules of section 1091, you may
and to cities, states, the District of Columbia,
You may show money items on the return as not be able to use the actual cash cost as the
U.S. commonwealths or possessions, and
whole dollars. To do so, drop any amount basis. If you do not use cash cost, attach an
certain foreign governments to carry out their
less than 50 cents and increase any amount explanation of your basis. Be sure to adjust
laws. We may also disclose this information
from 50 cents through 99 cents to the next your basis by subtracting all the nontaxable
to federal and state or local agencies to
higher dollar. distributions you received before the sale.
enforce federal nontax criminal laws and to
Also adjust your basis for any stock splits.
Amended Return combat terrorism.
For more information, see Pub. 551, Basis of
Assets.
To amend a previously filed Form 8725, file a Please keep this notice with your records. It
corrected Form 8725 and write “Amended” at may help you if we ask you for other
Line 4. Other income. If you realized any
the top of the form. information. If you have any questions about
other income that is subject to the excise tax,
the rules for filing and giving information,
enter the amount of the income on line 4.
Attachments please call or visit any Internal Revenue
Line 5. Total gain and other income. You
If more space is needed, attach separate Service office.
must include the recognized portion of the
sheets to Form 8725. Be sure to put your
The time needed to complete and file this
amount on line 5 as income on your federal
name and identifying number on each sheet.
form will vary depending on individual
income tax return.
circumstances. The estimated average time
Signature Line 6. Tax. You may not claim a deduction
is:
on your federal income tax return for the
See the instructions for the Signature section
Recordkeeping 5 hr., 30 min.
amount shown on line 6.
of your federal income tax return.
Learning about the law
Line 7. Tax paid with Form 7004. If you filed
Interest and Penalties or the form 42 min.
Form 7004, enter the amount of tax paid, if
Interest. Interest is charged on taxes not any, when you filed that form. Preparing and sending
paid by the due date at a rate determined the form to the IRS 49 min.
Line 8. Tax due. You must pay the tax due in
under section 6621. full when you file Form 8725. Make your
If you have comments concerning the
Late filing of return. A penalty of 5% a check or money order payable to the “United
accuracy of these time estimates or
month or part of a month, up to a maximum States Treasury.” Write your name, address,
suggestions for making this form simpler, we
of 25%, is imposed on the net amount due if identifying number, and “Form 8725” on the
would be happy to hear from you. You can
Form 8725 is not filed when due. check or money order.
write to the Internal Revenue Service, Tax
Late payment of tax. Generally, the penalty Line 9. Overpayment. The IRS will refund the Products Coordinating Committee,
for not paying tax when due is 1⁄ 2 of 1% of amount on line 9 if you owe no other taxes. SE:W:CAR:MP:T:T:SP, 1111 Constitution
the unpaid amount, up to a maximum of Ave., NW, IR-6526, Washington, DC 20224.
25%, for each month or part of a month the Privacy Act and Paperwork Reduction Act DO NOT send Form 8725 to this address.
tax remains unpaid. The penalty is imposed Notice. We ask for the information on this Instead, see Where To File above.
on the net amount due. form to carry out the Internal Revenue laws of
the United States. You are required to give us
Specific Instructions the information. We need it to ensure that you
are complying with these laws and to allow
Name and address. Enter the name shown
us to figure and collect the right amount of
on your most recently filed federal income tax
tax.