-CITE-
    26 USC CHAPTER 54 - GREENMAIL                               01/19/04

-EXPCITE-
    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.                                            

-SECREF-
                   CHAPTER REFERRED TO IN OTHER SECTIONS               
      This chapter is referred to in section 275 of this title.

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-CITE-
    26 USC Sec. 5881                                            01/19/04

-EXPCITE-
    TITLE 26 - INTERNAL REVENUE CODE
    Subtitle E - Alcohol, Tobacco, and Certain Other Excise Taxes
    CHAPTER 54 - GREENMAIL

-HEAD-
    Sec. 5881. Greenmail

-STATUTE-
    (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.

-SOURCE-
    (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.)


-MISC1-
                                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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