US Code

Public Law 119-73 (01/23/2026)

26 U.S.C. § 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.

Pub. L. 100–203, title X, § 10228(a)101 Stat. 1330–417Pub. L. 100–647, title II, § 2004o102 Stat. 3608(Added , , ; amended ()(1)(A), (B)(i), (C), (2), , .)

Editorial Notes

Amendments

Pub. L. 100–647, § 2004o1988—Subsec. (a). ()(1)(A), substituted “gain or other income of such person by reason of such receipt” for “gain realized by such person on such receipt”.

Pub. L. 100–647, § 2004oSubsec. (b). ()(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”.

Pub. L. 100–647, § 2004oSubsec. (d). ()(1)(C), substituted “amount” for “gain” in heading and inserted “or other income” after “the gain” in text.

Pub. L. 100–647, § 2004oSubsec. (e). ()(2), added subsec. (e).

Statutory Notes and Related Subsidiaries

Effective Date of 1988 Amendment

oPub. L. 100–647Pub. L. 100–203, title Xsection 2004(u) of Pub. L. 100–647section 56 of this titleAmendment by section 2004()(1)(A), (C), (2) of effective, except as otherwise provided, as if included in the provisions of the Revenue Act of 1987, , to which such amendment relates, see , set out as a note under .

Pub. L. 100–647, title II, § 2004o102 Stat. 3608

“The amendment made by clause (i) [amending this section] shall apply to transactions occurring on or after .”
()(1)(B)(ii), , , provided that:

Effective Date

Pub. L. 100–203, title X, § 10228(d)101 Stat. 1330–418

section 275 of this title“The amendments made by this section [enacting this chapter and amending ] shall apply to consideration received after the date of the enactment of this Act [] 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 , and at all times thereafter before the acquisition.”
, , , provided that: