I just read the following on the Inflation Reduction Act:
Excise Tax on Stock Buybacks
The Act would impose an excise tax on domestic publicly traded corporations that repurchase their stock directly (or through a more than 50% owned subsidiary corporation or partnership). The tax would be equal to 1% of the fair market value of the repurchased stock and would not be deductible. The tax would also apply to repurchases of stock of certain foreign corporations.
Notably, the Act also provides various exceptions. For example, the tax does not apply to the extent that: (1) the repurchase is part of a reorganization where no gain or loss is recognized by the shareholder; (2) the repurchased stock (or an amount of stock equal to the value of the stock repurchased) is contributed to an employer-sponsored retirement plan, employee stock ownership plan or similar plan; (3) the total value of stock repurchased during the taxable year does not exceed $1 million; (4) under regulations to be issued, the repurchase is by a dealer in securities in the ordinary course of business; (5) the repurchase is made by a RIC or a REIT, or (6) the repurchase is treated as a dividend.
The provision would be effective for repurchases that occur after December 31, 2022.
Cheers,
Mike