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consistent with the statute’s prescription; i.e., to prescribe
the form of the election. All items required by the regulation
to be included in the election serve the purpose of carrying out
the statute.
The regulation provides the information required in the
statement of election, which includes a notarized statement of
purchase of qualified replacement property, in order to elect
treatment under section 1042. Sec. 1.1042-1T, Q&A-3(b),
Temporary Income Tax Regs., 51 Fed. Reg. 4334 (Feb. 4, 1986). In
relevant part, the regulation provides:
A-2: (a) Under section 1042(b), a sale of qualified
securities is one under which all of the following
requirements are met:
* * * * * * *
(4) The taxpayer files with the Secretary (as part
of the required election described in Q&A-3 of this
section) a verified written statement of the domestic
corporation (or corporations) whose employees are
covered by the plan acquiring the qualified securities
or of any authorized officer of the eligible worker-
owned cooperative, consenting to the application of
section 4978(a) with respect to such corporation or
cooperative.
* * * * * * *
Q-3: What is the time and manner for making the
election under section 1042(a)?
A-3: (a) The election not to recognize the gain
realized upon the sale of qualified securities to the extent
provided under section 1042(a) shall be made in a “statement
of election” attached to the taxpayer’s income tax return
filed on or before the due date (including extensions of
time) for the taxable year in which the sale occurs. If a
taxpayer does not make a timely election under this section
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