§ 5881. Greenmail

• (a) 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) 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),
  • (3) such acquisition is pursuant to an offer which was not made on the same terms to all shareholders.
• (c) For purposes of this section—
  • (1) 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) 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) The tax imposed by this section shall apply whether or not the gain or other income referred to in subsection (a) is recognized.
• (e) 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.