Federal Excise Tax on Greenmail

Excise Tax on Greenmail
Form 8725 (Rev. December 2015)
The form you are looking for begins on the next page of this file. Before viewing it, please see
the important update information below.

New Mailing Addresses

Addresses for mailing certain forms have changed since the forms were last published. The new mailing
addresses are shown below.
Mailing address for Forms 706‐A, 706‐GS(D), 706‐GS(T), 706‐NA, 706‐QDT, 8612, 8725, 8831, 8842, 8892,
8924, 8928:
Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999
Mailing address for Forms 2678, 8716, 8822-B, 8832, 8855:
Taxpayers in the States Below
Connecticut, Delaware, District of Columbia, Georgia,
Illinois, Indiana,Kentucky, Maine, Maryland,
Massachusetts, Michigan, New Hampshire, New Jersey,
New York, North Carolina, Ohio, Pennsylvania, Rhode
Island, South Carolina, Vermont, Virginia, West Virginia,
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Utah, Washington, Wyoming

Mail the Form to This Address
Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999

Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201

This update supplements these forms’ instructions. Filers should rely on this update for the changes described,
which will be incorporated into the next revision of the forms’ instructions.

8725

Form
(Rev. December 2015)

Department of the Treasury
Internal Revenue Service

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Date of initial receipt of greenmail

Information about Form 8725 and its instructions is at www.irs.gov/form8725.
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Identifying number

Name of person receiving greenmail

Please
Type
or
Print

Number, street, and room or suite no. (If a P.O. box, see instructions.)
City or town, province or state, country, and ZIP or foreign postal code

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

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

Tax Computation (see instructions)
Net sales price .

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(a) Date acquired

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(b) Number of shares

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(c) Cost or other basis

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Column (b) total .

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Column (c) total . . . . . . . . . . . . . . . . .
Gain. Subtract line 2g from line 1. If zero or less, enter -0- . . .
Other 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 . . . . . . . . . . . .

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

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Overpayment. Subtract line 6 from line 7

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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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Title (if any)

Print/Type preparer’s name

PTIN

Firm’s name

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Firm's EIN

Firm's address

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Phone no.

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Form 8725 (Rev. 12-2015)

Page 2

Form 8725 (Rev. 12-2015)

General Instructions

When To File

For the latest information about
developments related to Form 8725 and
its instructions, such as legislation
enacted after they were published, go to
www.irs.gov/form8725.

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.

Purpose of Form

Where To File

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.

File Form 8725 at the following address:
Internal Revenue Service Center
Cincinnati, OH 45999

Section references are to the Internal
Revenue Code.

Future Developments

Definitions
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 shareholder, any person acting in
concert with the shareholder, or any
person related to either of them (see
Related person, later), 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.
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).

Who Must File
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.

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 ½
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 return. Include the
room, suite, 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.

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 1. Enter the net proceeds received
from the sale of the stock subject to the
excise tax.
Column 2(a). 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). 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 reacquired 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. If you realized any other income
that is subject to the excise tax, enter
the amount of the income on line 4.
Line 5. You must include the recognized
portion of the amount on line 5 as
income on your federal income tax
return.
Line 6. You may not claim a deduction
on your federal income tax return for the
amount shown on line 6.
Line 7. If you filed Form 7004, enter the
amount of tax paid, if any, when you filed
that form.
Line 8. 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. The IRS will refund the amount
on line 9 if you owe no other taxes.

Page 3

Form 8725 (Rev. 12-2015)

Paid Preparer Use Only
A paid preparer must sign Form 8725
and provide the information in the Paid
Preparer Use Only section at the end of
the form if the preparer was paid to
prepare the form and is not an employee
of the filing entity. The preparer must
give you a copy of the form in addition to
the copy to be filed with the IRS.
If you are a paid preparer, enter your
Preparer Tax Identification Number
(PTIN) in the space provided. Include
your complete address. If you work for a
firm, you also must enter the firm’s name
and the EIN of the firm. However, you
cannot use the PTIN of the tax
preparation firm in place of your PTIN.
You can apply for a PTIN online or by
filing Form W-12, IRS Paid Preparer Tax
Identification Number (PTIN) Application
and Renewal. For more information
about applying for a PTIN online, visit the
IRS website at www.irs.gov/ptin.

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. 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.
Section 6109 requires you to provide
your identifying number. Routine uses of
this information include giving it to the
Department of Justice for civil and
criminal litigation, and to cities, states,
the District of Columbia, and U.S.
commonwealths and possessions for
use in administering their tax laws. We
may also disclose this information to
other countries under a tax treaty, to
federal and state agencies to enforce
federal nontax criminal laws, or to
federal law enforcement and intelligence
agencies to combat terrorism. Failure to
provide this information in a timely
manner or providing false or fraudulent
information may subject you to penalties.
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.
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 . . . . . . . . 1 hr.
Preparing, copying, assembling,
and sending the form to
the IRS
. . . . . . 1 hr., 7 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 send your comments to:
Internal Revenue Service
Tax Forms and Publications
SE:W:CAR:MP:TFP
1111 Constitution Ave., NW, IR-6526
Washington, DC 20224
DO NOT send Form 8725 to this
address. Instead, see Where To File
earlier.