§ 5881. — Greenmail.
[Laws in effect as of January 7, 2003]
[Document not affected by Public Laws enacted between
January 7, 2003 and December 19, 2003]
[CITE: 26USC5881]
TITLE 26--INTERNAL REVENUE CODE
Subtitle E--Alcohol, Tobacco, and Certain Other Excise Taxes
CHAPTER 54--GREENMAIL
Sec. 5881. Greenmail
(a) Imposition of tax
There is hereby imposed on any person who receives greenmail a tax
equal to 50 percent of gain or other income of such person by reason of
such receipt.
(b) Greenmail
For purposes of this section, the term ``greenmail'' means any
consideration transferred by a corporation (or any person acting in
concert with such corporation) to directly or indirectly acquire stock
of such corporation from any shareholder if--
(1) such shareholder held such 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
such acquisition--
(A) such shareholder,
(B) any person acting in concert with such shareholder, or
(C) any person who is related to such shareholder or person
described in subparagraph (B),
made or threatened to make a public tender offer for stock of such
corporation, and
(3) such acquisition is pursuant to an offer which was not made
on the same terms to all shareholders.
For purposes of the preceding sentence, payments made in connection
with, or in transactions related to, an acquisition shall be treated as
paid in such acquisition.
(c) Other definitions
For purposes of this section--
(1) Public tender offer
The term ``public tender offer'' means any offer to purchase or
otherwise acquire stock or assets in a corporation if such offer was
or would be required to be filed or registered with any Federal or
State agency regulating securities.
(2) Related person
A person is related to another person if the relationship
between such persons would result in the disallowance of losses
under section 267 or 707(b).
(d) Tax applies whether or not amount recognized
The tax imposed by this section shall apply whether or not the gain
or other income referred to in subsection (a) is recognized.
(e) Administrative provisions
For purposes of the deficiency procedures of subtitle F, any tax
imposed by this section shall be treated as a tax imposed by subtitle A.
(Added Pub. L. 100-203, title X, Sec. 10228(a), Dec. 22, 1987, 101 Stat.
1330-417; amended Pub. L. 100-647, title II, Sec. 2004(o)(1)(A), (B)(i),
(C), (2), Nov. 10, 1988, 102 Stat. 3608.)
Amendments
1988--Subsec. (a). Pub. L. 100-647, Sec. 2004(o)(1)(A), substituted
``gain or other income of such person by reason of such receipt'' for
``gain realized by such person on such receipt''.
Subsec. (b). Pub. L. 100-647, Sec. 2004(o)(1)(B)(i), substituted ``a
corporation (or any person acting in concert with such corporation) to
directly or indirectly acquire stock of such corporation'' for ``a
corporation to directly or indirectly acquire its stock''.
Subsec. (d). Pub. L. 100-647, Sec. 2004(o)(1)(C), substituted
``amount'' for ``gain'' in heading and inserted ``or other income''
after ``the gain'' in text.
Subsec. (e). Pub. L. 100-647, Sec. 2004(o)(2), added subsec. (e).
Effective Date of 1988 Amendment
Amendment by section 2004(o)(1)(A), (C), (2) of Pub. L. 100-647
effective, except as otherwise provided, as if included in the
provisions of the Revenue Act of 1987, Pub. L. 100-203, title X, to
which such amendment relates, see section 2004(u) of Pub. L. 100-647,
set out as a note under section 56 of this title.
Section 2004(o)(1)(B)(ii) of Pub. L. 100-647 provided that: ``The
amendment made by clause (i) [amending this section] shall apply to
transactions occurring on or after March 31, 1988.''
Effective Date
Section 10228(d) of Pub. L. 100-203 provided that: ``The amendments
made by this section [enacting this chapter and amending section 275 of
this title] shall apply to consideration received after the date of the
enactment of this Act [Dec. 22, 1987] in taxable years ending after such
date; except that such amendments shall not apply in the case of any
acquisition pursuant to a written binding contract in effect on December
15, 1987, and at all times thereafter before the acquisition.''
