[Code of Federal Regulations]
[Title 26, Volume 17]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR156.5881-1]

[Page 459]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 156_EXCISE TAX ON GREENMAIL--Table of Contents
 
                       Subpart A_Tax on Greenmail
 
Sec. 156.5881-1  Imposition of excise tax on greenmail.




                       Subpart A_Tax on Greenmail

Sec.
156.5881-1 Imposition of excise tax on greenmail.

                 Subpart B_Procedure and Administration

156.6001-1 Notice or regulations requiring records, statements, and 
          special returns.
156.6011-1 General requirement of return, statement, or list.
156.6061-1 Signing of returns and other documents.
156.6065-1 Verification of returns.
156.6071-1 Time for filing returns relating to greenmail.
156.6081-1 Extension of time for filing the return.
156.6091-1 Place for filing chapter 54 (Greenmail) tax returns.
156.6091-2 Exceptional cases.
156.6151-1 Time and place for paying of tax shown on returns.
156.6161-1 Extension of time for paying tax or deficiency.
156.6165-1 Bonds where time to pay tax or deficiency has been extended.

    Authority: Sections 6001, 6011, 6061, 6071, 6091, 6161, and 7805 of 
the Internal Revenue Code of 1986 (26 U.S.C. 6001, 6011, 6061, 6071, 
6091, 6161, and 7805).

    Source: T.D. 8379, 56 FR 65685, Dec. 18, 1991, unless otherwise 
noted.



    (a) In general. Section 5881 of the Code imposes a tax equal to 50 
percent of the gain or other income realized by any person on the 
receipt of greenmail, whether or not the gain or other income is 
recognized.
    (b) Transactions occurring on or after March 31, 1988. For 
transactions occurring on or after March 31, 1988, greenmail is defined 
as any consideration transferred by a corporation (or any person acting 
in concert with the corporation) to directly or indirectly acquire stock 
of the corporation from any shareholder if:
    (1) The transferring shareholder has held the stock (as determined 
under section 1223) for less than two years before entering into the 
agreement to transfer the stock,
    (2) The shareholder, any person acting in concert with the 
shareholder, or any person related to the shareholder or to a person 
acting in concert with the shareholder made or threatened to make a 
public tender offer for stock of the corporation at some time during the 
two-year period ending on the date of the acquisition of the stock by 
the corporation, and
    (3) The acquisition is pursuant to an offer that was not made on the 
same terms to all shareholders.
    (c) Transactions occurring before March 31, 1988. For transactions 
occurring before March 31, 1988, greenmail has the same meaning as in 
paragraph (b) of this section, except that it does not include any 
consideration transferred by any person acting in concert with the 
corporation described in that paragraph.
    (d) Effective date. Generally, section 5881 of the Code applies to 
consideration received after December 22, 1987, in taxable years ending 
after that date. However, section 5881 does not apply to any acquisition 
of stock pursuant to a written binding contract in effect on December 
15, 1987, and at all times thereafter before the acquisition.