Form 8725 - Excise Tax On Greenmail Page 2

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Form 8725 (Rev. 12-2015)
Page
General Instructions
When To File
Identifying number. If you are an
individual, enter your social security
File Form 8725 by the 90th day following
Section references are to the Internal
number. If you are a nonresident or
receipt of any portion of the greenmail. If
Revenue Code.
resident alien and you do not have and
you need more time to file, use Form
Future Developments
are not eligible for a social security
7004, Application for Automatic
number, enter your individual taxpayer
For the latest information about
Extension of Time To File Certain
identification number (ITIN). Other filers
developments related to Form 8725 and
Business Income Tax, Information, and
should enter their employer identification
its instructions, such as legislation
Other Returns, by the due date of Form
number.
enacted after they were published, go to
8725. Form 7004 does not extend the
Tax Computation
time for payment of tax.
Purpose of Form
Where To File
Line 1. Enter the net proceeds received
from the sale of the stock subject to the
Use Form 8725 to report and pay the
File Form 8725 at the following address:
excise tax.
50% excise tax imposed under section
Internal Revenue Service Center
Column 2(a). For each separate
5881 on the gain or other income
Cincinnati, OH 45999
acquisition of stock subject to the excise
realized on the receipt of greenmail
Rounding Off to Whole
tax, enter the date acquired (for
(defined below). Greenmail is considered
example, the trade date for stock traded
Dollars
received when the gain or other income
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
increase any amount from 50 cents
Definitions
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
Amended Return
sale” rules of section 1091, etc.
acting in concert with a corporation)
pays to a shareholder to directly or
Column 2(c). The cost or other basis of
To amend a previously filed Form 8725,
indirectly acquire its stock if:
stock is generally the cost of the stock
file a corrected Form 8725 and write
plus purchase commissions. If you
1. The shareholder held the stock (as
“Amended” at the top of the form.
inherited the stock, received it as a gift,
determined under section 1223) for less
Attachments
received it in a tax-free exchange, or re-
than 2 years before entering into the
acquired stock in a “wash sale”
agreement to make the transfer,
If more space is needed, attach separate
transaction subject to the rules of
sheets to Form 8725. Be sure to put your
2. At some time during the 2-year
section 1091, you may not be able to
name and identifying number on each
period ending on the date of acquisition,
use the actual cash cost as the basis. If
sheet.
the shareholder, any person acting in
you do not use cash cost, attach an
concert with the shareholder, or any
Signature
explanation of your basis. Be sure to
person related to either of them (see
See the instructions for the Signature
adjust your basis by subtracting all the
Related person, later), made or
section of your federal income tax return.
nontaxable distributions you received
threatened to make a public tender offer
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.
Line 7. If you filed Form 7004, enter the
Public tender offer. The term “public
The penalty is imposed on the net
amount of tax paid, if any, when you filed
tender offer” means any offer to
amount due.
that form.
purchase or otherwise acquire stock or
Specific Instructions
Line 8. You must pay the tax due in full
assets in a corporation if the offer was
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
Line 9. The IRS will refund the amount
would result in losses disallowed under
street address and the taxpayer has a
on line 9 if you owe no other taxes.
section 267 or 707(b).
P.O. box, show the box number instead
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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