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26 USC CHAPTER 54 - GREENMAIL 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle E - Alcohol, Tobacco, and Certain Other Excise Taxes

CHAPTER 54 - GREENMAIL

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CHAPTER 54 - GREENMAIL

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Sec.

5881. Greenmail.

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CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in section 275 of this title.

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26 USC Sec. 5881 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle E - Alcohol, Tobacco, and Certain Other Excise Taxes

CHAPTER 54 - GREENMAIL

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Sec. 5881. Greenmail

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(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.

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(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.)

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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."

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