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Form 8725(Rev. December 2013)
Department of the TreasuryInternal Revenue Service
Excise Tax on Greenmail
Information about Form 8725 and its instructions is at
www.irs.gov/form8725.
OMB No. 1545-1086
Date of initial receipt of greenmail . . . . . . . . . . . . . .
. . . . . . . .
Please
Type
or
Print
Name of person receiving greenmail Identifying number
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
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 Net sales price . . . . . . . . . . . . . . . . . . . . . . .
. . . . 1
2 (a) Date acquired (b) Number of shares (c) Cost or other
basis
a
b
c
d
e
f Column (b) total . . . .
g Column (c) total . . . . . . . . . . . . . . . . . . . . . . .
. . . . 2g
3 Gain. Subtract line 2g from line 1. If zero or less, enter -0-
. . . . . . . . . . . . . 3
4 Other income . . . . . . . . . . . . . . . . . . . . . . . . .
. . 4
5 Total gain and other income. Add lines 3 and 4. See
instructions . . . . . . . . . . . 5
6 Tax. Multiply line 5 by 50% (.50) . . . . . . . . . . . . . .
. . . . . . . 6
7 Less: Tax paid with Form 7004 . . . . . . . . . . . . . . . .
. . . . . . 7
8 Tax due. Subtract line 7 from line 6. If zero or less, enter
-0- . . . . . . . . . . . . 8
9 Overpayment. Subtract line 6 from line 7 . . . . . . . . . . .
. . . . . . . 9Under 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 istrue,
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)
PaidPreparer
Use Only
Print/Type preparers name Preparer's signature DateCheck
ifself-employed
PTIN
Firms name
Firm's address Firm's EIN
Phone no.
For Privacy Act and Paperwork Reduction Act Notice, see
instructions. Cat. No. 64873D Form8725(Rev. 12-2013
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Form 8725 (Rev. 12-2013) Page 3
General InstructionsSection references are to the
InternalRevenue Code.
Future DevelopmentsFor the latest information aboutdevelopments
related to Form 8725 andits instructions, such as
legislationenacted after they were published, go to
www.irs.gov/form8725.Purpose of FormUse Form 8725 to report and
pay the50% excise tax imposed under section5881 on the gain or
other incomerealized on the receipt of greenmail(defined below).
Greenmail is consideredreceived when the gain or other incomeis
realized under your method ofaccounting regardless of whether
thegain or other income is recognized.
DefinitionsGreenmail. The term greenmail meansanyamount a
corporation (or any person
acting in concert with a corporation)pays to a shareholder to
directly orindirectly acquire its stock if:
1. The shareholder held the stock (asdetermined under section
1223) for lessthan 2 years before entering into theagreement to
make the transfer,
2. At some time during the 2-yearperiod ending on the date of
acquisition,the shareholder, any person acting inconcert with the
shareholder, or anyperson related to either of them (seeRelated
person, later), made orthreatened to make a public tender offerfor
stock of the corporation, and
3. The acquisition was made under anoffer that was not made on
the sameterms to all shareholders.
Note. Payments made in connectionwith (orin transactions related
to) anacquisition aretreated as paymentsmade for the acquisitionof
the stock.
Indirect acquisition of stock. Stock isdeemed to have been
acquired indirectlybythe issuing corporation if such stockis soldto
an entity related to the issuingcorporation(for example, a
controlledsubsidiary).
Public tender offer. The term publictenderoffer means any offer
topurchase orotherwise acquire stock or
assets in acorporation if the offer wasrequired to befiled or
registered with anyfederal or stateagency regulatingsecurities.
Related person.A person is consideredrelated to another person
if therelationshipbetween such personswould result in
lossesdisallowed undersection 267 or 707(b).
Who Must FileYou must file Form 8725 if you are liablefor the
excise tax on greenmail undersection 5881. File a separate Form
8725for each agreement made to transferstock.
When To FileFile Form 8725 by the 90th day followingreceipt of
any portion of the greenmail. Ifyou need more time to file, use
Form7004, Application for AutomaticExtension of Time To File
CertainBusiness Income Tax, Information, andOther Returns, by the
due date of Form8725. Form 7004 does not extend the
time for payment of tax.
Where To FileFile Form 8725 at the following address:
Internal Revenue Service CenterCincinnati, OH 45999
Rounding Off to WholeDollarsYou may show money items on
thereturn as whole dollars. To do so, dropany amount less than 50
cents andincrease any amount from 50 centsthrough 99 cents to the
next higherdollar.
Amended ReturnTo amend a previously filed Form 8725,file a
corrected Form 8725 and writeAmended at the top of the form.
AttachmentsIf more space is needed, attach separatesheets to
Form 8725. Be sure to put yourname and identifying number on
eachsheet.
SignatureSee the instructions for the Signaturesection of your
federal income tax return.
Interest and Penalties
Interest. Interest is charged on taxes notpaid by the due date
at a ratedeterminedunder section 6621.
Late filing of return.A penalty of 5% amonth or part of a month,
up to amaximumof 25%, is imposed on the netamount due ifForm 8725
is not filedwhen due.
Late payment of tax. Generally, thepenaltyfor not paying tax
when due is of 1% ofthe unpaid amount, up to amaximum of25%, for
each month orpart of a month thetax remains unpaid.The penalty is
imposedon the netamount due.
Specific InstructionsName and address. Enter the nameshownon
your most recently filedfederal income tax return. Include theroom,
suite, apartment, or other unitnumber after the street address. If
thePost Office does not deliver mail to thestreet address and the
taxpayer has aP.O. box, show the box number insteadof the street
address.
Identifying number. If you are anindividual,enter your social
securitynumber. If you are anonresident orresident alien and you do
nothave andare not eligible for a social securitynumber, enter your
individual taxpayeridentification number (ITIN). Other filersshould
enter their employer identificationnumber.
Tax ComputationLine 1. Enter the net proceeds receivedfrom the
sale of the stocksubject to theexcise tax.
Column 2(a). For each separateacquisition of stock subject to
theexcisetax, enter the date acquired (forexample, the trade date
for stock tradedonan exchange or over the counter).See section1223
for special rules ondetermining theholding period of stockreceived
in anexchange, for stock thathas the same basisin whole or in part
asit would have in thehands of anotherperson, for stock subject to
the wash
sale rules of section 1091, etc.Column 2(c). The costor other
basis ofstock is generally the cost ofthe stockplus purchase
commissions. If youinherited the stock, received it as a
gift,received it in a tax-free exchange, orre-acquired stock in a
wash saletransactionsubject to the rules ofsection 1091, you maynot
be able touse the actual cash cost as the basis. Ifyou do not use
cash cost, attach anexplanation of your basis. Be sure toadjustyour
basis by subtracting all thenontaxabledistributions you
receivedbefore the sale.Also adjust your basisfor any stock
splits.For more
information, see Pub. 551, Basis ofAssets.
Line 4. If you realized anyother incomethat is subject to the
excise tax,enterthe amount of the income on line 4.
Line 5. Youmust include the recognizedportion of theamount on
line 5 asincome on your federalincome taxreturn.
Line 6. You may not claim a deductionon your federal income tax
return for theamount shown on line 6.
Line 7. If you filedForm 7004, enter theamount of tax paid,
ifany, when you filedthat form.
Line 8. You must pay the tax due infullwhen you file Form 8725.
Make yourcheck or money order payable to theUnitedStates Treasury.
Write yourname, address,identifying number, andForm 8725 on
thecheck or moneyorder.
Line 9. The IRS will refund theamounton line 9 if you owe no
other taxes.
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Form 8725 (Rev. 12-2013) Page 4
Paid Preparer Use OnlyA paid preparer must sign Form 8725and
provide the information in the PaidPreparer Use Only section at the
end ofthe form if the preparer was paid toprepare the form and is
not an employeeof the filing entity. The preparer mustgive you a
copy of the form in addition tothe copy to be filed with the
IRS.
If you are a paid preparer, enter yourPreparer Tax
Identification Number(PTIN) in the space provided. Includeyour
complete address. If you work for afirm, you also must enter the
firms nameand the EIN of the firm. However, youcannot use the PTIN
of the taxpreparation firm in place of your PTIN.
You can apply for a PTIN online or byfiling Form W-12, IRS Paid
Preparer TaxIdentification Number (PTIN) Applicationand Renewal.
For more informationabout applying for a PTIN online, visit theIRS
website at www.irs.gov/ptin.
Privacy Act and Paperwork ReductionAct Notice. We ask for the
informationon thisform to carry out the InternalRevenue laws ofthe
United States. Weneed it to ensure that youare complyingwith these
laws and to allowus to figureand collect the right amount
oftax.
Section 6109 requires you to provideyour identifying number.
Routine uses of
this information include giving it to theDepartment of Justice
for civil andcriminal litigation, and to cities, states,the
District of Columbia, and U.S.commonwealths and possessions foruse
in administering their tax laws. Wemay also disclose this
information toother countries under a tax treaty, tofederal and
state agencies to enforcefederal nontax criminal laws, or tofederal
law enforcement and intelligenceagencies to combat terrorism.
Failure toprovide this information in a timelymanner or providing
false or fraudulentinformation may subject you to penalties.
You are not required to provide the
information requested on a form that issubject to the Paperwork
Reduction Actunless the form displays a valid OMBcontrol number.
Books or recordsrelating to a form or its instructions must
be retained as long as their contentsmay become material in
theadministration of any Internal Revenuelaw. Generally, tax
returns and returninformation are confidential, as requiredby
section 6103.
The time needed to complete and filethis form will vary
depending onindividual circumstances. The estimated
average time is:Recordkeeping . . . . 5 hr., 30 min
Learning about the lawor the form . . . . . . . . 1 hr
Preparing, copying, assembling,and sending the form tothe IRS .
. . . . . 1 hr., 7 min
If you have comments concerning theaccuracy of these time
estimates orsuggestions for making this formsimpler, we would be
happy to hear fromyou. You can send your comments to:
Internal Revenue ServiceTax Forms and
PublicationsSE:W:CAR:MP:TFP1111 Constitution Ave., NW,
IR-6526Washington, DC 20224
DO NOT send Form 8725 to thisaddress. Instead, see Where To
Fileearlier.
