Repurchase of Corporate Stock

Cross References

IRC §4501

Announcement 2023-18 The Inflation Reduction Act of 2022 created a new code section called “Repurchase of Corporate Stock” which is an excise tax imposed on a covered corporation equal to 1% of the fair market value (FMV) of any stock of the corporation which is repurchased by the corporation during the tax year. A covered corporation is any domestic corporation the stock of which is traded on an established securities market.

The IRS recently announced that no taxpayer is required to report the new excise tax on repurchases of corporate stock during the year on any returns filed, or to make any payments of such tax, before the time specified in regulations that have yet to be issued. For those taxpayers with a taxable year ending after December 31, 2022, but prior to publication of the forthcoming regulations, such regulations are expected to provide that any liability for the stock repurchase excise tax for such taxable year will be reported on the Form 720 that is due for the first full quarter after the date of publication of the forthcoming regulations, and that the deadline for payment of the stock repurchase excise tax is the same as the filing deadline.

Taxpayers must keep complete and detailed records to establish accurately any amount of stock repurchases, including repurchases made after December 31, 2022, but before the forthcoming regulations are published.