Form 7208 Instructions in Plain English
The Form 7208 instructions come down to a subtraction and a multiplication. Add up the fair market value (FMV, what the stock was worth) of stock repurchased during your tax year. Subtract certain exceptions, stock contributed to employer retirement plans, and stock issued or provided. Then multiply by 1%. The result goes on Form 720 at IRS No. 150.
This guide follows the form line by line, using the December 2025 instructions. For background on the tax itself, see Form 7208 explained. The company and figures in the example are invented.
Who has to file Form 7208?
Three kinds of filer appear in the instructions. Each is defined by whose stock moved and who bought it.
| Filer | In plain terms | Files when |
|---|---|---|
| Covered corporation | A domestic corporation with stock traded on an established securities market | Its stock is repurchased by it, or acquired by a specified affiliate from someone other than it or its specified affiliates |
| Applicable specified affiliate | Certain affiliates of a foreign corporation whose stock trades on an established securities market | It acquires the foreign parent's stock from someone other than the parent or its specified affiliates |
| Expatriated entity | An entity defined in section 7874(a)(2)(A), tied to a covered surrogate foreign corporation | The surrogate's stock is repurchased by it or acquired by its specified affiliate during the tax year |
A specified affiliate is a corporation more than 50% owned by vote or value, or a partnership with more than 50% of capital or profits interests held, directly or indirectly.
A covered corporation that is a regulated investment company (RIC), a real estate investment trust (REIT), or a non-RIC '40 Act fund does not need to file. Privately held companies are outside the definition of a covered corporation, since the definition requires stock traded on an established securities market.
What does each part of Form 7208 do?
| Lines | What you enter | Direction |
|---|---|---|
| Part I, line 1 | A table of repurchases: name and EIN if another entity did the buying, transaction type, symbol, class, market, shares, and FMV | Builds the total |
| Lines 2-3 | Continuation sheet total, then the sum of line 1, column (h), and line 2 | Line 3 is the starting number |
| Line 4 | Yes or No: any repurchases of stock of an applicable foreign corporation or covered surrogate foreign corporation | Information only |
| Part II, lines 5a-5e | 5a split-offs, 5b repurchases treated as dividends, 5c reserved, 5d securities dealers, 5e total | Subtracted |
| Part III, lines 6-8 | Stock contributed to employer-sponsored retirement plans | Line 8 is subtracted |
| Part IV, lines 9a-9d | 9a stock for services to the corporation, 9b stock for services to a specified affiliate, 9c other stock issued | Line 9d is subtracted |
| Part V, lines 10-11 | Line 3 minus lines 5e, 8, and 9d; then 1% of that | Line 11 goes to Form 720 |
Column (c) of line 1 takes a code for the transaction: OMR (open-market repurchase), Tender Offer, ASR (accelerated share repurchase), Reorganization, Split-Off, NLF, or Other. Open-market repurchases of the same class by the same entity during the year go on one line. If a single transaction involves two entities, or two classes of stock, each gets its own line.
Where does the $1 million check come in?
It comes right after line 4. If line 3 is $1 million or less, complete Part I and attach the form to Form 720. If line 3 is more than $1 million, continue to Part II. Applicable specified affiliates measure this differently: the threshold adds together repurchases by all applicable specified affiliates of the same foreign corporation. One with its own line 3 at or below $1 million must attach a separate statement with the line 1 information for the others.
Form 7208 math, line by line
Beacon Industrial Corp. (invented) is a covered corporation with a calendar tax year. It bought back 230,000 shares of one class on the open market, with a total FMV of $18,400,000, or $80 a share. Of those, 5,000 shares worth $400,000 were in a transaction treated as a dividend, with sufficient evidence. It later contributed 12,500 shares of the same class to its 401(k) plan, and issued stock to employees and others.
| Line | Math | Amount |
|---|---|---|
| 1(h) and 3: repurchases | 230,000 x $80 | $18,400,000 |
| 5b and 5e: treated as dividend | 5,000 x $80 | $400,000 |
| 6(b): net shares | 230,000 - 5,000 | 225,000 |
| 6(c): net FMV | $18,400,000 - $400,000 | $18,000,000 |
| 6(d): average price | $18,000,000 / 225,000 | $80.00 |
| 6(f) and (i), then 8: plan contribution | 12,500 x $80 | $1,000,000 |
| 9a: stock for services | Given | $2,200,000 |
| 9c: other stock issued | Given | $800,000 |
| 9d: total issued | $2,200,000 + $800,000 | $3,000,000 |
| 10: net amount | $18,400,000 - $400,000 - $1,000,000 - $3,000,000 | $14,000,000 |
| 11: tax, and Form 720 IRS No. 150 | $14,000,000 x 1% | $140,000 |
The FMV on line 6 is an average for the class, not the price on the contribution date. If shares of another class are contributed instead, they go in columns (g) and (h), at FMV when contributed. Column (i) cannot exceed column (c). Contributions count if made by the filing deadline of the Form 720 the Form 7208 must be attached to.
Line 9b does not apply here. Applicable specified affiliates and expatriated entities enter -0- on lines 9b and 9c. Lines 9a and 9b leave out stock already counted in Part III.
When is Form 7208 due, and how is it filed?
It is an annual form on a quarterly return. Attach it to the Form 720 due for the first full quarter after your tax year closes.
| Tax year ends in | Attach to | Regular due date | Next actual date |
|---|---|---|---|
| Jan., Feb., Mar. | 2nd Quarter Form 720 | July 31, same year | Aug. 2, 2027 (July 31 is a Saturday) |
| Apr., May, June | 3rd Quarter Form 720 | October 31, same year | Nov. 2, 2026 (Oct. 31 is a Saturday) |
| July, Aug., Sept. | 4th Quarter Form 720 | January 31, following year | Feb. 1, 2027 (Jan. 31 is a Sunday) |
| Oct., Nov., Dec. | 1st Quarter Form 720 | April 30, following year | April 30, 2027 (a Friday) |
- Form 720 line. Enter the amount from Form 7208, Part V, line 11, on the line for IRS No. 150. It sits in Part II. If you e-file, IRS business rule F720-222 requires a non-zero amount there to equal the tax on all attached Forms 7208.
- Late filing. The penalty can be 5% of the unpaid tax for each month or part of a month, up to 25%, unless you show reasonable cause. Do not attach an explanation when you file; send it after an IRS notice.
- Late payment. The penalty can be ½ of 1% of the unpaid tax for each month or part of a month, up to 25%, unless you show reasonable cause.
- Records. You must keep records that establish the amounts you report. The Form 720 must be signed under penalties of perjury.
More on timing is in the Form 7208 due date guide. The latest IRS updates are at IRS.gov/Form7208.
Reporting IRS No. 150 online
Work through your Form 7208 figures first, since determining FMV and exceptions is for you and your advisers. Then you can report the stock repurchase tax with your Form 720. EasyFile720 is an IRS-authorized e-file provider for Form 720 and covers Part II categories, where IRS No. 150 sits. It guides you from business details through to submission, and validations catch common mistakes first.
Read the stock repurchase tax overview for more on this line. You can create an account for free and pay $39.95 when you file Form 720 online.
FAQ
Do I still file Form 7208 if repurchases were under $1 million?▼
Yes. A filer whose line 3 is $1 million or less completes Part I and attaches the form to Form 720. It does not go on to the later parts.
Is the $1 million a deduction from the tax base?▼
No. Nothing in the line 10 math subtracts it. Once line 3 is over $1 million, you continue through the form, and line 10 starts from the full line 3 amount.
Do I need to make deposits for this tax?▼
The Form 720 instructions say no deposit is required for taxes in Part II, except the floor stocks tax. IRS No. 150 is in Part II, so the tax is payable with the return.
How do I correct a Form 7208 I already filed?▼
File a corrected Form 7208 with "Amended" entered at the top, and attach it to Form 720-X for the quarter to which the earlier Form 7208 was attached.
What if line 10 is zero or negative?▼
Enter -0- on line 10 and attach Form 7208 to Form 720. You do not continue to line 11.
File Form 720 online
Create a free account with no credit card and build your return. You pay $39.95 only when you file. EasyFile720 is an IRS-authorized e-file provider, and you get an acknowledgment when the IRS accepts your return.
Sources: Instructions for Form 7208 (Rev. December 2025); Instructions for Form 720 (Rev. June 2026); Form 720 (Rev. June 2026); IRS 720 Business Rules Publication 2026Q4 v1.0. General information, not tax advice. Confirm how the rules apply to you with a qualified advisor or the IRS.
